President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday for the first time since his renomination as inflation plagues the country’s economic recovery.
According to the White House, the Oval Office meeting between the two will feature a discussion about the current state of the U.S. and global economy and how to address the towering consumer prices. Biden launched an effort this week to convince the public that he is addressing inflation, which has badly hurt his approval ratings and undercut support for his agenda.
The meeting comes as inflation cooled on an annual basis for the first time since 2020 in the gauge favored by the Fed. The monthly decline, which will almost certainly be discussed, might be an early sign that inflation has started to peak.
Inflation, as measured by the personal consumption expenditures price index, decreased to 6.3% in the 12 months ending in April, according to data released by the Bureau of Economic Analysis on Friday morning. The Fed's target for inflation is 2%.
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The Fed is at a precarious time as it continues to raise interest rates in response to the too-high inflation. It must toe the line between reining in inflation and preventing the economy from cratering into a recession.
The central bank increased its interest rate target by a quarter of a percentage point in March and subsequently hiked rates by half a percentage point earlier this month. The half-point hike is akin to two simultaneous rate increases and shows that the Fed is growing increasingly more worried about the higher prices.
Inflation tracked by the Consumer Price Index, which is better known by the general public, increased 8.3% for the 12 months ending in April. Although that number is exceedingly high, it was a slight decline from the month before, which experienced 8.5% annual inflation.
Powell, a Republican, was renominated to helm the central bank by Biden and enjoyed bipartisan support during his confirmation. Nevertheless, some Republicans hoped he would have moved faster to raise interest rates and tighten monetary policy.
The meeting comes a day after the president published an opinion piece in the Wall Street Journal. Biden said that he has a three-part plan for battling inflation, the first part of which is letting the Fed have the independence it needs to stave off the higher prices.
“My predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won’t do this,” Biden wrote. “I have appointed highly qualified people from both parties to lead that institution.”
He also discussed the need to bring down the price of energy and goods and noted that he pushed for the largest released from global oil reserves in history in an effort to push down the price of gas, which has repeatedly been breaking records.
Biden also said that fixing frayed supply chains is another priority for his administration. He expressed his desire to cut down on the fees that foreign ocean freight companies charge to move products.
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The third part of the plan was bringing down the federal deficit, which he said would ease price pressures. He cited the Congressional Budget Office projection that the deficit will fall by $1.7 trillion this year and said that about half of the decrease is because of increased revenue collection.
“I welcome debate on my plan to tackle inflation and move the economy to stable and steady growth,” Biden said.
The budget office expects deficits to remain high and rise in the coming years, putting pressure on other parts of the federal budget.