The White House Monday said an “important turning point” has been reached in the three-year battle against the surge in inflation and that it’s important to protect progress in the job market.
“Inflation is coming back down close to normal levels, and it is important to safeguard the important labor market progress we have made,” Lael Brainard, director of President Biden’s National Economic Council, said in a speech before the Council on Foreign Relations.
Her comments come as the Federal Reserve is poised to cut interest rates this week for the first time in four years, as officials have declared they’ve gained confidence inflation is coming back down to their 2% target and that attention is shifting to a cooling labor market.
Fed Chair Jay Powell said in his last speech in Jackson Hole, Wyo., in late August that the Fed “will do everything we can to support a strong labor market as we make further progress toward price stability.” He noted that the Fed does not “seek or welcome further cooling in labor market conditions” and that the current level of the policy rate gives the Fed “ample room” to lower rates in response to any weakening in the job market.
Brainard said the administration’s policies to assist in supply chain bottlenecks and address commodities price spikes, coupled with a commitment to respect the Fed’s independence, has helped bring inflation back down.
“This was an important contrast to [Biden’s] predecessor, who repeatedly criticized Federal Reserve monetary policy during the previous administration,” Brainard said.
Brainard underscored the administration’s policies and work to address affordability challenges, including housing by building millions of new affordable homes and providing incentives for states and localities to remove outdated obstacles to building. She also emphasized the importance of expanding the labor force by subsidizing costly childcare 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 sales tax of $4,000 on middle-class families,” she said.
