The White House said Monday that an “important turning point” had been reached in the three-year battle against soaring inflation and that it was important to protect gains in the labor market.
“Inflation is returning to near-normal levels, and it is important to preserve the important progress we have made in the labor market,” Lael Brainard, director of President Biden’s National Economic Council, said in a speech to the Council on Foreign Relations.
His comments come as the Federal Reserve is set to cut interest rates this week for the first time in four years, as officials said they had gained confidence that inflation was returning to its 2% target and as attention shifted to a cooling labor market.
Fed Chairman Jay Powell said in his final speech in Jackson Hole, Wyoming, in late August that the Fed “will do everything in its power to support a strong labor market as we move toward price stability.” He noted that the Fed neither “seeks nor welcomes a further weakening in labor market conditions” and that the current level of the policy rate gives it “ample room” to lower rates in response to any weakening in the labor market.
Brainard said the administration’s policies to help address supply chain bottlenecks and address commodity price spikes, coupled with a commitment to respect the Fed’s independence, have helped bring down inflation.
“This is a stark contrast to (Biden’s) predecessor, who repeatedly criticized the Federal Reserve’s monetary policy during the previous administration,” Brainard said.
Brainard highlighted the administration’s policies and efforts to address affordability challenges, including in housing, by building millions of new affordable homes and providing incentives to states and local governments to remove outdated barriers to construction. She also stressed the importance of expanding the workforce by subsidizing costly child care and investing in clean energy, semiconductors and AI to create jobs.
“This is very different from an approach that would weaken our economy by undermining the independence of the Federal Reserve and the rule of law, add trillions to the debt and impose what amounts to a $4,000 sales tax on middle-class families,” she said.
