U.S. President Joe Biden on Wednesday said it was appropriate for the Federal Reserve to recalibrate the support it provides to the U.S. economy, in light of fast-rising prices and the strength of recovery.
“Given the strength of our economy and recent price increases, it’s appropriate, as … Fed Chairman [Jerome] Powell has indicated, to recalibrate the support that is now necessary,” Biden told a news conference.
“The critical job of making sure that the elevated prices don’t become entrenched rests with the Federal Reserve, which has a dual mandate: full employment and stable prices,” the president said.
At the same time, he said, the White House and Congress could help contain inflation by moving to fix supply chain failures, encourage competition, and pass his Build Back Better spending bill that he says would cut child care and other costs for families.
Fed policymakers have signaled they will raise interest rates several times this year, likely starting in March, to try to rein in inflation that’s rising at its fastest pace in nearly 40 years. A reduction in the Fed’s $8 trillion balance sheet could soon follow.
At his renomination hearing earlier this month, Powell told lawmakers that he would not allow inflation to become entrenched and said a tighter policy stance was necessary to keep the economy growing.
Biden also called on the U.S. Senate to confirm his recent nominations for key roles on the Federal Reserve Board “without any further delay.”
Biden earlier this month nominated former Fed Governor Sarah Bloom Raskin for the Fed’s top regulatory post and two Black economists, Lisa Cook and Philip Jefferson, to round out the Fed’s seven-member board.
Late last year Biden renominated Powell to lead the Fed for another four years and nominated Fed Governor Lael Brainard to serve as Fed vice chair. The picks would remake the Fed Board to be the most diverse in the central bank’s 108-year history.