President Joe Biden said on Wednesday that his administration is working to relieve bottlenecks threatening the economic recovery and trusts the Federal Reserve to take any steps that may be needed to rein in prices.
A report Wednesday showed that U.S. consumer price increases slowed in July, signaling a possible peak, though inflation remained at a 13-year high on an annual basis as the U.S. economy recovers from the COVID-19 recession.
The rising tide of inflation has sparked worries that the Fed will begin to pull back on its policies designed to stimulate the economy.
Higher prices of everything from homes to gasoline and shortages in supplies that were affected by COVID-19 social-distancing protocols threaten a recovery that has been Biden's focus since taking office in January, along with ending the public health crisis.
"Right now, our experts believe that - the major independent forecasters agree as well - that these bottlenecks and price spikes will reduce as our economy continues to heal," Biden said. "While today's consumer price report points in that direction, we will keep a careful eye on inflation each month, and trust the Fed to take appropriate action if and when it's needed."
The Fed's most recent projections do not see an interest rate increase needed until perhaps 2023, but the recent pace of price increases has intensified debate over whether faster action may be needed, including cutting back on the Fed's $120 billion in monthly bond purchases.
Fed Chair Jerome Powell has repeatedly said the current burst in inflation is likely temporary. Biden faces a choice in the next few months over whether to appoint Powell to another four-year term when his current term ends in February.
In the meantime, Biden highlighted measures his administration is taking, including intensifying pressure on OPEC and its oil-producing allies to take steps that could cut gasoline prices.
The administration has also been working to bust what it sees as potential anti-competitive behavior, for instance in U.S. gasoline markets, that Biden said he worried was putting a pinch in working families' budgets.
On Wednesday, the White House directed the Federal Trade Commission to investigate "divergences between oil prices and the cost of gasoline at the pump."
Biden also said the administration is bringing together port operators, shipping lines, labor unions, trucking companies, railroads and others in an effort to relieve congestion at major ports including California's Long Beach and Los Angeles.
© 2021 Thomson/Reuters. All rights reserved.