© Reuters. US President Joe Biden has announced the nomination of Federal Reserve Chairman Jerome Powell for a second four-year term and Federal Reserve Board Member Lyle Brainard as Vice President while Powell stands in the Eisenhower Executive Office.

Written by Garrett Renshaw

(Reuters) – US President Joe Biden is set to meet Federal Reserve Chairman Jerome Powell on Tuesday as historic inflation continues to empty Americans’ wallets.

The meeting, the first since Powell’s confirmation of a second term by the Senate earlier this month, comes as Biden seeks to cut the cost of gasoline, food and consumer goods, which has pushed inflation to a 40-year high.

Brian Dies, director of the White House National Economic Council, said in televised interviews on Tuesday that Biden will reaffirm the independence of the Federal Reserve and indicate that the central bank has the tools to tackle inflation and discuss the US and global economy.

“We’re in this transition from a historic economic recovery — historic in terms of jobs created, historical in terms of wealth created for American families — and now we must transition to more stable and resilient growth,” he told MSNBC.

US stock index futures fell on Tuesday ahead of the scheduled session at 1:15 pm (1715 GMT).

The US economy recorded its strongest growth in nearly four decades in 2021 after the government pumped trillions of COVID-19 relief money into the economy and spurred consumer spending that helped drive up prices.

A Labor Department report earlier this month https://www.reuters.com/business/us-weekly-jobless-claims-decline-moderately-2022-04-21 showed unemployment numbers fell to a 52-year low , which helped drive wage growth.

The Fed has already raised interest rates by 3/4 percentage point this year and plans to raise rates by half a percentage point at each of the next two meetings, with further increases likely after that.

The Fed hopes that inflation will come down at least partially on its own, as companies, for example, work to solve supply chain problems complicated by the pandemic and consumers shift their spending to services.

But Powell also made clear that the Fed no longer expects this and will raise interest rates when necessary. He sees high inflation as the country’s biggest economic risk and controlling it as the Fed’s top priority during his second term, even as the process has proven painful for families and businesses and pushed the unemployment rate somewhat higher.

This could mean a difficult midterm season for Biden and the Democratic Party as they try to maintain control of Washington.

In an opinion piece published in the Wall Street Journal on Monday, Biden said the Fed’s primary function is to control inflation.

“His predecessor insulted the Federal Reserve, and previous presidents tried unduly to influence its decisions in times of high inflation,” Biden said. I will not do that “.

The Fed, led by Powell, has been criticized by some economists for being slow to tackle high inflation by ending emergency aid to the economy and beginning to raise interest rates.

US consumer price growth slowed sharply in April as gasoline prices fell from record highs, suggesting inflation may have peaked, although it is likely to stay hot for a while with the Fed staying on the brakes. to appease the request.

Powell said last week that despite some encouraging signs that price pressures may be peaking, the current environment “is not a time for highly accurate inflation measurements” and US Federal Reserve officials will continue to tighten policy until inflation “convincingly declines”.