Biden Weighs-In on Inflation

President Biden outlined a three-part strategy for combating inflation in a WSJ op-ed published yesterday, just ahead of a meeting with Fed Chair Jerome Powell at the White House.

🏛️ As easy as 1, 2, 3...

1. In the op-ed, Biden said it’s the “primary responsibility” of the Fed to control inflation. The central bank raised interest rates by a half-percentage point in May, and has signaled they plan to do the same in June and July.
2. The second part of Biden’s plan called for taking “every practical step to make things more affordable for families.” His list of proposals included fixing disrupted supply chains, increasing housing supply, lowering the cost of child and elder care and more.
3. Biden committed to keep reducing the federal deficit, which he said will ease price pressures. Per nonpartisan projections, the deficit will shrink from $2.8 trillion in 2021 to $1.0 trillion this year, largely due to the expiration of pandemic-era stimulus, and will average $1.6 trillion per year over the next decade.

💰 The big picture: US inflation remained near a four-decade high in April, declining slightly to an annualized rate of 8.3% (from 8.5%); the Consumer Price Index for May will be published next Friday.

• Fed Governor Christopher Waller said this week that he expects interest rates to keep rising through the rest of the year, and likely exceed the 2.5% level the central bank considers “neutral” (aka neither supportive nor restrictive for economic growth).