WASHINGTON (AFP) – With United States (US) inflation high and the Federal Reserve expected to hike interest rates within months, US President Joe Biden said on Friday he had faith in the central bank’s ability to manage price increases while ensuring that businesses keep hiring.
“I want to be clear: I’m confident the Federal Reserve will act to achieve their dual goals of full employment and stable prices and make sure the price increases do not become entrenched over a long term, with the independence that they need,” the president said at the White House.
He spoke following the release of the Labor Department’s December employment report, which showed a disappointing 199,000 jobs added in the final month of the year, but the unemployment rate dipping to 3.9 per cent, not far from where it was before the Covid-19 pandemic.
The Fed is undoubtedly paying close attention to the report, as policymakers led by Chair Jerome Powell juggle how to fight the inflation surge that’s pushed consumer prices to multi-decade highs without stifling the labour market’s recovery from its collapse in 2020.
At its policy meeting last month, Fed officials signalled as many as three rate hikes in 2022, and minutes from the conference released this week showed them ready to move even more aggressively against inflation, if necessary.
Officials also believed the economy was nearing full employment, if it was not there already, although they also were wary of the Omicron variant of Covid-19, which has caused new cases to soar in recent weeks, the minutes said.
While overall hiring was under analysts’ forecast last month, the Labor Department data showed the economy added 6.4 million jobs in 2021, with the unemployment rate ending the year near its 3.5 per cent level of before the pandemic.
In November, Biden, a Democrat, nominated Powell for a second term in office, despite wishes from some of the president’s allies to pass the Republican chair over for a more progressive candidate.