Federal Reserve Chairman Jerome Powell on Wednesday broke with President Biden’s repeated attempts to blame Russian President Vladimir Putin’s invasion of Ukraine for the highest inflation in 40 years.
Powell, confirmed last month for a second term as chairman, told the Senate Banking Committee that “inflation was high before” Russia’s February 24 invasion of Ukraine, which boosted global commodity prices. food and energy.
Sen. Bill Hagerty (R-Tenn.) prompted Powell’s remark during a committee hearing after exposing the fact that inflation had risen through 2021.
“I realize that there are a number of factors that play a role in the historic inflation that we are experiencing – supply chain disruptions, regulations that limit supply, we have expectations of rising inflation and excessive budget spending, but the problem didn’t come out of nowhere,” Hagerty said.
“In January 2021, inflation was 1.4%. By December 2021, it had risen to 7%, a fivefold increase. Now, since the start of the war in Ukraine at the end of February, the inflation rate has gradually increased by 1.6% to a current level of 8.6%. So again, from 7% to 8.6%.”
Hagerty asked Powell, “Given the escalation of inflation over the past 18 months, would you say the war in Ukraine is the main driver of inflation in America?”
“No, inflation was high before – certainly before the war in Ukraine broke out,” Powell said.
“I’m glad to hear you say that,” Hagerty replied. “The Biden administration appears intent on deflecting blame and, just last Sunday, spread the disinformation that Putin’s invasion of Ukraine is the ‘biggest driver of inflation.’ I’m glad you agree with me that’s not the truth.
For months, the White House sought to label the highest inflation since 1981 as “Putin’s price hike.”
“Putin’s price hike hit hard in May here and around the world: high gasoline prices at the pump, energy and food prices accounted for about half of the monthly price increases,” he said. Biden said in a statement this month after data showed annual inflation in the United States. climbed to 8.6% in May from 8.3% in April.
Responding to questions from Sen. Kyrsten Sinema (D-Arizona) on Wednesday, Powell said fuel and food prices were clearly influenced by the war in Ukraine — even though most of the annual price increase is not was unrelated.
“Rising commodity prices are clearly linked to the war in Ukraine. And so that part of the inflation is certainly much lower than it is without the war in Ukraine,” Powell said.
The Federal Reserve, meanwhile, raises interest rates in an attempt to contain inflation.
Republicans, centrist Democrats, Amazon/Washington Post owner Jeff Bezos and – on at least one occasion – Biden himself have said massive government spending has helped spur inflation, including the American Rescue Last year’s $1.9 trillion Plan Act.
Inflation in the United States in May – 8.6% – was higher than in many other Western countries. The Eurozone average was 8.1%, Canada reported 7.7% and South Korea reported 5.4% annual inflation for that month.
A study published in late March by researchers at the Federal Reserve Bank of San Francisco said that in the last quarter of 2021, about 3 percentage points of US inflation – or about half of it at the time – may have been caused by government spending in the event of a pandemic. .
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