Will back Fed on inflation by cutting on demand: US President Joe Biden

As US President Joe Biden gets ready to meet US Federal Reserve chairman later on Tuesday, he said that he would support the Fed in its effort to curb high inflation by reducing economic demand, as the central bank is set to lift interest rates at its fastest pace in more than three decades.

“The most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down,” Biden said, as he agreed with the Fed’s assessment “that fighting inflation is our top economic challenge right now.”

In an opinion piece published in The Wall Street Journal on Monday, Biden outlined a broad three-part plan for addressing inflation, which is running at a 40-year high. Biden said it was likely that the pace of job growth could slow from a monthly pace of 500,000 jobs to around 150,000 as a necessary result of the Fed’s efforts to combat high inflation.

Biden said his "predecessor demeaned the Fed, and past presidents have sought to influence its decisions inappropriately during periods of inflation. I won't do this."

The Fed hopes inflation will at least in part moderate on its own, as companies sort out supply chain issues complicated by the pandemic and consumers shift spending toward services.