net_left adver left

Analysis - Biden, Democrats need moderate Republican Powell to fight inflation

Tuesday, July 26, 2022
Analysis - Biden, Democrats need moderate Republican Powell to fight inflation © Reuters. FILE PHOTO: U.S. President Joe Biden meets with Federal Reserve Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen to talk about the economy in the Oval Office at the White House in Washington, D.C., U.S., May 31, 2022. REUTERS/Leah Millis

By Trevor Hunnicutt

WASHINGTON (Reuters) - Ahead of a crucial midterm election, U.S. President Joe Biden is leaning heavily on one man, moderate Republican and Federal Reserve Chair Jerome Powell, to tackle the top issue worrying voters: inflation.

For much of American history, the president relying on stewardship of the world's largest economy from a Federal Reserve official appointed by the opposition political party would not be remarkable. But hyper-politicization in Washington makes the Biden-Powell relationship unusual, and one likely to be tested in months to come.

White House officials believe the Nov. 8 midterm election for control of Congress will be a referendum on Biden's handling of consumer price spikes - an issue Powell has more tools to contain than the administration.

But the Fed's painful medicine for inflation threatens to zap consumer demand and throw Americans out of work. The Fed is expected to raise rates again on Wednesday by 75 basis points, furthering the central bank's shift away from ultra-loose policies launched after the COVID-19 pandemic.

"Joe Biden and Jay Powell understand they need each other," said Sarah Binder, a political science professor at George Washington University, who studies relationships between presidents and the Fed. "The Fed needs the White House to be supportive of these policy choices that could throw the economy into a recession."

Rates are now set above 1.5%, up from near-zero in March as the Fed takes aim at consumer inflation exceeding 9%, punishing the housing market and causing executives to reconsider investments and hiring. Biden's approval has fallen back to a record low of 36%, Reuters/Ipsos polling shows, with voters more concerned about inflation than other policy issues.

Powell's big challenge now is figuring out how far to go to contain inflation, and whether to stick with aggressive rate hikes at the expense of spooking markets or causing a recession.

Biden, wed to Powell's decisions after re-upping the Donald Trump-chosen lawyer as Fed chair in November, now has no choice but to wait for the results.

Gary Richardson, a University of California, Irvine, economics professor said the bipartisan approach is meant to shield the Fed from political pressure.

But inflation tends "to create a lot of trouble for incumbent politicians and that's been a constant over centuries. It's going to be the same in November."

BIDEN BACKS TRUMP APPOINTEE

After months of deliberations, Biden left the Federal Reserve's policy portfolio with Powell even without a clear sense of how the official first picked and then bullied by Trump, would handle inflation.

Powell, a D.C.-area native, followed a well-trod path to influence including stops on Wall Street, the Treasury and a centrist think tank.

Biden's pick was mostly an endorsement of Powell's prior experience and stewardship. It was also a nod to Biden's belief that the Fed could stand apart from the polarization evidenced by judicial decisions and lock-step congressional Republican opposition to Democratic bills.

The Powell selection, which was welcomed by financial markets, also gives Biden a scapegoat if something goes wrong, analysts said. Both Democrats and Republicans are likely to pounce on Powell if they perceive the slightest hint he is towing a political line.

If the Fed chief is partisan, he has shown little sign of it within the largely consensus-driven Fed.

In his first year as chair in 2018, Powell continued the policy started under his predecessor Janet Yellen, a Democrat now serving as Biden's Treasury secretary, of raising rates from near-zero as the economy recovered from the 2007-09 Great Recession, raising Trump's ire.

By the next year, the Fed was cutting rates again on concerns over slowing growth, a greater emphasis on employment and the belief that inflation may be too low.

The White House was aware that its Fed nominees announced from November through January were undecided then about whether price hikes needed to be corrected with sharply tighter monetary policy, one administration official said.

"It is the primary job of the Federal Reserve to get inflation under control," according to a White House official. "They are a well-qualified and serious group with immense experience."

In retrospect, the Fed, administration officials and most economists failed at anticipating inflation's persistence amid continued supply constraints and new issues like the Ukraine war.

Now, the Fed is set to be on a tightening trajectory not seen since former Chair Paul Volcker's 1980s-era battle with inflation.

"My plan is to address inflation," Biden said before a private meeting with Powell in May. "It starts with a simple proposition: Respect the Fed and respect the Fed's independence, which I have done and will continue to do."

"I hear that and I think blame avoidance," said Binder. "Shifting the blame to the Fed, telling the Fed, This is your job."

Blaming the other guy is a time-honored practice in Washington, and the Fed would not be immune to criticism regardless of the political affiliation of its chief. And while it may not be Biden's style, other Democrats, not so keen on being congenial with Republicans, may find fault with Powell.

For its part, the administration hopes the steps it is taking to unclog ports, cheapen trans-ocean shipping and lower gasoline prices with strategic reserve releases, for instance, can make it easier for the Fed to tamp down inflation without raising rates too high, according to one person familiar with officials' thinking, solving the inflation problem without causing a growth problem.

Leave your comment
HOT AUTO TRADE BOT SOFTWARE adver right
APPROVED BROKERS
net_home_top HOT AUTO TRADE BOT SOFTWARE
19-08-2022 15:52:13 (UTC+7)

EUR/USD

1.0082

-0.0006 (-0.06%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

EUR/USD

1.0082

-0.0006 (-0.06%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (9)

GBP/USD

1.1884

-0.0046 (-0.39%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

USD/JPY

136.41

+0.54 (+0.39%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (9)

AUD/USD

0.6905

-0.0013 (-0.19%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (5)

Sell (2)

USD/CAD

1.2979

+0.0032 (+0.25%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (7)

Sell (3)

EUR/JPY

137.55

+0.47 (+0.34%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (7)

EUR/CHF

0.9653

+0.0001 (+0.02%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (6)

Gold Futures

1,767.70

-3.50 (-0.20%)

Summary

Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (5)

Sell (2)

Silver Futures

19.175

-0.289 (-1.48%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (9)

Sell (0)

Copper Futures

3.6225

-0.0090 (-0.25%)

Summary

Neutral

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (4)

Sell (1)

Crude Oil WTI Futures

89.20

-1.30 (-1.44%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (6)

Brent Oil Futures

95.22

-1.37 (-1.42%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (3)

Sell (4)

Natural Gas Futures

9.079

-0.109 (-1.19%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (2)

Sell (6)

US Coffee C Futures

215.25

+0.45 (+0.21%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (9)

Sell (1)

Euro Stoxx 50

3,745.85

-31.53 (-0.83%)

Summary

Neutral

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (6)

Sell (2)

S&P 500

4,283.74

+9.70 (+0.23%)

Summary

Sell

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (0)

Sell (8)

DAX

13,578.65

-118.76 (-0.87%)

Summary

Neutral

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (6)

Sell (1)

FTSE 100

7,525.10

-16.75 (-0.22%)

Summary

Neutral

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (7)

Sell (1)

Hang Seng

19,772.50

+8.59 (+0.04%)

Summary

Neutral

Moving Avg:

Buy (6)

Sell (6)

Indicators:

Buy (1)

Sell (3)

US Small Cap 2000

2,000.73

+13.41 (+0.68%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (4)

Sell (2)

IBEX 35

8,343.90

-86.40 (-1.02%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (9)

BASF SE NA O.N.

43.197

-0.243 (-0.56%)

Summary

Neutral

Moving Avg:

Buy (3)

Sell (9)

Indicators:

Buy (7)

Sell (1)

Bayer AG NA

53.24

-0.82 (-1.52%)

Summary

Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (3)

Sell (3)

Allianz SE VNA O.N.

175.65

-2.87 (-1.61%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (0)

Sell (8)

Adidas AG

166.08

-1.44 (-0.86%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (7)

Sell (0)

Deutsche Lufthansa AG

6.319

-0.247 (-3.76%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (9)

Siemens AG Class N

109.32

-0.94 (-0.85%)

Summary

Neutral

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (7)

Sell (1)

Deutsche Bank AG

8.598

-0.270 (-3.04%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (10)

 EUR/USD1.0082↑ Sell
 GBP/USD1.1884↑ Sell
 USD/JPY136.41↑ Sell
 AUD/USD0.6905Neutral
 USD/CAD1.2979↑ Buy
 EUR/JPY137.55↑ Sell
 EUR/CHF0.9653↑ Sell
 Gold1,767.70Buy
 Silver19.175↑ Buy
 Copper3.6225Neutral
 Crude Oil WTI89.20↑ Sell
 Brent Oil95.22↑ Sell
 Natural Gas9.079↑ Sell
 US Coffee C215.25↑ Buy
 Euro Stoxx 503,745.85Neutral
 S&P 5004,283.74Sell
 DAX13,578.65Neutral
 FTSE 1007,525.10Neutral
 Hang Seng19,772.50Neutral
 Small Cap 20002,000.73↑ Buy
 IBEX 358,343.90↑ Sell
 BASF43.197Neutral
 Bayer53.24Sell
 Allianz175.65↑ Sell
 Adidas166.08↑ Buy
 Lufthansa6.319↑ Sell
 Siemens AG109.32Neutral
 Deutsche Bank AG8.598↑ Sell
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank6,600/ 6,700
(0/ 0) # 1,725
SJC HCM6,620/ 6,720
(0/ 0) # 1,745
SJC Hanoi6,620/ 6,722
(0/ 0) # 1,747
SJC Danang6,620/ 6,722
(0/ 0) # 1,747
SJC Nhatrang6,620/ 6,722
(0/ 0) # 1,747
SJC Cantho6,620/ 6,722
(0/ 0) # 1,747
Cập nhật 19-08-2022 15:52:15
Xem lịch sử giá vàng SJC: nhấn đây!
ↀ Giá vàng thế giới
$1,753.95-4.62-0.26%
Live 24 hour Gold Chart
ʘ Giá bán lẻ xăng dầu
Sản phẩmVùng 1Vùng 2
RON 95-V25.34025.840
RON 95-III24.66025.150
E5 RON 92-II23.72024.190
DO 0.05S22.90023.350
DO 0,001S-V24.88025.370
Dầu hỏa 2-K23.32023.780
ↂ Giá dầu thô thế giới
WTI$88.77+1.491.65%
Brent$95.23+0.380.40%
$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD23.235,0023.545,00
EUR22.981,7524.268,73
GBP27.175,3928.334,31
JPY167,13176,93
KRW15,2618,59
Cập nhật lúc 15:46:22 19/08/2022
Xem bảng tỷ giá hối đoái
adver main right