US President Joe Biden will meet Federal Reserve Chairman Jerome Powell on Tuesday to discuss economic issues with him, as the United States faces inflation above 8%, a situation not seen in 40 years.
It will be the first meeting between the two leaders since the US president nominated Powell to a second term as Fed boss last November. This appointment was approved by the US Senate on May 12.
Inflation slowed slightly in April across the Atlantic, but it remains at a very high level. Over one year, prices jumped 8.3% in April, after +8.5% in March. Over a month, prices rose 0.6% in April after jumping 1.2% in March, giving financial markets hope that a peak may now have been reached.
At least two half-point rate hikes expected in June and July
While US household consumption has held up well so far, sentiment has fallen to a decade low due to inflation concerns, according to the University of Michigan’s Consumer Sentiment Index released on Friday. With the approach of the mid-term legislative elections scheduled for November, Joe Biden has made the fight against inflation a priority, relying in particular on the Federal Reserve which began a cycle of rate hikes in March to curb the costs.
In the “Minutes” of its meeting of May 3 and 4, published on May 25, the Fed confirmed that it was preparing to continue raising the “fed funds” rate (located at 0.75%-1 % currently), in half-point increments, for at least two meetings, in June and July, or even beyond if necessary.
On May 17, Jerome Powell said he was determined to raise rates until inflation receded. The Fed will “need to see clear and convincing evidence” that inflation is easing before it slows its rate hikes, he said in an interview with the ‘Wall Street Journal’, adding that he still believes a possible “almost soft” landing for the US economy despite the tightening of credit conditions.
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