(Washington) Joe Biden wants to try to convince Americans that his administration is doing everything possible to lower prices without slowing economic activity, while inflation, at its highest level in 40 years, is compressing wallets and reduces purchasing power.
Posted at 10:36 a.m.
The Democratic president is due to present his “plan to fight inflation and cut costs for working families” at 11:30 a.m. Tuesday.
With the approach of the mid-term elections and with a mediocre popularity rating, Joe Biden must reassure Americans who are unconvinced by his economic policy.
“The United States is in stronger economic health than any other major advanced economy in the world,” the White House said on Tuesday, while acknowledging that “at the same time, inflation is too high and straining working families.
“The President’s top economic priority is to fight inflation and reduce costs for American families – so that we can support this historic economic recovery in a way that benefits all Americans,” she said. added in a press release.
The subject was already on his agenda on Monday, with announcements of lower internet subscription prices.
But Tuesday, Joe Biden will also take the opportunity to attack the Republican opposition, criticizing in particular the economic program recently unveiled by Republican Senator Rick Scott.
“Congressional Republicans, led by Sen. Rick Scott, have called for a new minimum tax for the middle class—firefighters and teachers—that would mean nearly $1,500 less on average in families’ pockets each year,” thus pointed the finger at the White House in the press release.
The Democratic administration also denounces a plan of measures that “threatens to extinguish programs” like Medicare and Medicaid, which provide health insurance to the poorest and oldest.
Inflation figures for April will be released on Wednesday, and the rise in prices could start to slow down. However, it would remain at levels that the United States had not known since the very beginning of the 1980s.
In March, inflation had risen to 8.5% over one year, according to the CPI index, the one on which pensions are indexed, in particular. Soaring gas and food prices with the war in Ukraine are a big part of this. However, without these two items of expenditure, inflation was still 6.5%.
Make credit more expensive
The American central bank, the Fed, for its part has started to raise its key rates. This has the effect of increasing the interest rates of the credits that commercial banks grant to their customers, and therefore of slowing down consumption and investment.
And the Fed should act “quickly to bring key rates back to more normal levels this year” after bottoming out during the pandemic to support the economy, New York Fed Chairman John Williams said on Tuesday. , at a conference in Germany of the Bundesbank and the National Association for Business Economics (NABE).
That is to say raise them to around 2 to 2.50%, against 0.75% to 1% currently. The Fed had raised them by a quarter of a percentage point in mid-March, then by an additional half a percentage point on May 4, the first turn of the screw of this magnitude since 2000.
The monetary institution had estimated that further hikes of half a percentage point would be on the table at the next two meetings, June 14-15 and July 26-27.
According to John Williams, the Fed has “the right tools to achieve (its) objectives”.
“In fact, we have an advantage over previous inflationary episodes: our monetary policy tools are particularly powerful in the very sectors where we see the greatest imbalances and signs of overheating, such as durable goods and housing,” he estimated.