Following a rare meeting between President Joe Biden and Federal Reserve Chair Jerome Powell, Biden emphasized the importance of allowing the Fed to act autonomously as it works to reduce inflation and prevent a recession.
The meeting occurred days prior to the announcement that inflation rates had once again reach decades-high levels at 8.6 percent for the month of May.
It also came as the Fed’s Federal Open Market Committee (FOMC) is preparing for its mid-June meeting where it plans to increase interest rates again by 0.5 percentage points. Although some economists are anticipating a possible 0.75 percentage point increase as the Fed’s efforts have yet to have an effect on inflation.
“My plan to address inflation starts with the simple proposition: Respect the Fed, respect the Fed's independence, which I have done and will continue to do,” Biden told reporters during the meeting with Powell. President Biden has begun to face the political cost for the high inflation with members of his own party beginning to suggest a re-election campaign in 2024 may not be wanted.
The Biden administration has made significant efforts to combat some of the main drivers of inflation, including housing costs, where the price of homes saw a nearly 19 percent increase in 2021 and has shown little sign of stopping. These housing cost increases have been driven by record lows in housing inventory. According to Redfin, the seasonally adjusted inventory of homes has declined by over 50 percent since February 2020.