Fed chief at odds with Biden on cause of US inflation

Fed Chairman Powell: “No. Inflation was high before, certainly before the war broke out in Ukraine”

Russia’s military operation in Ukraine is not the “main driver,” Jerome Powell told lawmakers.

The chairman of the US Federal Reserve has rejected the White House’s claim that the rise in inflation in the country is mainly due to the crisis in Ukraine. During a Senate hearing on Wednesday, Jerome Powell noted that inflation was running high even before Russia attacked his neighboring state.

I was responding to a question from Senator Bill Hagerty of Tennessee, who said that the price situation in the US had many determining factors, including “supply chain disruptions, supply-constraining regulations…increasing inflation expectations and excessive fiscal spending.”

He then asked if Powell agreed with the Biden administration that the situation in Ukraine was the most influential factor, considering the dynamics of inflation over the last 18 months.

“No, inflation was high… before the war broke out in Ukraine,” the Fed chief said.

Since Russia attacked Ukraine in late February, the White House has repeatedly blamed Russian President Vladimir Putin for causing inflation in the US. He even coined the term “Putin’s Price Hike”.

“We know that 61% of [recent inflation] It’s driven by price, by energy costs, by Putin’s invasion of Ukraine.” Jen Psaki, who was the White House press secretary at the time, told reporters in late April.

Last Sunday, the White House tweeted that the situation in Ukraine was “the single biggest driver of inflation” in the country. Senator Hagerty described this as “disinformation” and said in his exchange with Powell that it was an attempt to deflect blame.

Later that day, Energy Secretary Jennifer Granholm was asked about Powell’s response during a press conference. “Most would say that the price of fuel has exacerbated inflation”, he said, claiming that the war in Ukraine had increased prices by decreasing supply.

Russia attacked its neighboring state in late February, after Ukraine failed to implement the terms of the Minsk agreements, first signed in 2014, and Moscow’s eventual recognition of the Donbass republics of Donetsk and Lugansk. The protocol negotiated by Germany and France was designed to give breakaway regions special status within the Ukrainian state.

Since then, the Kremlin has demanded that Ukraine officially declare itself a neutral country that will never join the US-led NATO military bloc. kyiv insists the Russian offensive was completely unprovoked and has denied claims it planned to retake the two republics by force.

Ben Oakley
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