President Joe Biden is meeting with Federal Reserve Chair Jerome Powell on Tuesday as inflation continues to pressure American households.
The Fed hiked interest rates by 0.5% earlier this month — the largest rate increase since May 2000 — in an attempt to curb rising price levels. The move followed a 0.25% rate hike from near-zero levels two months ago. In April, year-over-year consumer price inflation was 8.3% — a level that has not been seen in 40 years.
Biden is meeting with Powell “to show that he is serious about inflation,” American Enterprise Institute senior fellow Desmond Lachman told The Daily Wire. The two officials were also joined by Treasury Secretary Janet Yellen, who served as Fed chair before Powell began his first term in 2018.
“He’s wanting to show that he’s fully supportive of the Fed’s move to hike interest rates to deal with inflation,” Lachman, a former International Monetary Fund official, added. “From Powell’s point of view, this is a good meeting.”
Hiking interest rates slow economic activity by increasing the cost of borrowing capital. Past presidents — including Richard Nixon, Ronald Reagan, and George H.W. Bush — have therefore called for central bankers to avoid rate increases, according to Axios. Most recently, Donald Trump pushed Powell to slash rates as the economy began to freefall amid the spread of COVID-19. Biden’s approach marks a departure from his predecessors as high prices weigh on American consumers ahead of the midterm elections.
“It’s obvious that Biden realizes inflation is the key political problem,” Lachman added, noting that no policy changes will emerge from the Tuesday meeting. “He’s making sure that nobody blames him for having produced the inflation.”
Indeed, Biden acknowledged rising price levels in a Monday opinion piece for The Wall Street Journal. The commander-in-chief expressed his refusal to “meddle with the Fed,” but vowed to make tackling high prices his “top economic priority” while arguing that the central bank still “has a primary responsibility to control inflation.”
“Americans are anxious. I know that feeling. I grew up in a family where it mattered when the price of gas or groceries rose,” Biden wrote. “We felt it around the kitchen table. But the American people should have confidence that our economy faces these challenges from a position of strength.”
There are signs that inflation is giving consumers pause from summer spending plans.
A recent poll from Echelon Insights found that 75% of parents are “extremely” or “very” concerned about the “rising cost of everyday purchases like food or gas.” When asked if their families have “changed or canceled plans for a family trip” because of inflation, 51% answered positively — and 41% said they “changed or canceled activities for my children like camp or extracurricular activities.”
Another survey conducted by Morning Consult on behalf of the American Hotel & Lodging Association showed that 57% of Americans are “likely to take a family vacation this summer.” However, 90% of Americans have considered “gas prices” or “inflation” when deciding to travel. In contrast, 78% listed “COVID-19 rates.”
Monday marked the highest Memorial Day gas prices in more than a decade, according to data from AAA and the U.S. Energy Information Administration. Prices at the pump hit $4.62 per gallon on Memorial Day 2022 — 53% higher than the $3.03 per gallon on Memorial Day 2021 and 136% higher than the $1.96 per gallon on Memorial Day 2020.