The president of United States Joe Biden assured this Tuesday, with a view to the next legislative elections to be held in November, that inflation is their “top priority.”
“Our economy has gone from being on the mend to being on the move and I want all Americans to know that I’m taking inflation very seriously and that is my top domestic priority,” Biden said.
Biden’s recognition came one day before inflation is known of Aprilwhich analysts expect to be equal to or even higher than that of March, which stood at 1.2%, accumulating an increase of 8.5% year-on-year, the highest rate since 1981.
In this context, the US president admitted that some of the “roots of inflation are out of control”including the coronavirus pandemic and the effects of the war between Russia and Ukraine.
His message is known at times when fuel prices –a highly sensitive factor in the American economy–reached a new record.
This Tuesday, according to the AAA drivers association, the average price per gallon (3.78 liters) was $4,374thus surpassing the previous record of March 11, when after the Russian invasion of Ukraine and the beginning of the sanctions against Moscow, the gallon stood at $4.33.
The previous year the average price of a gallon of gasoline was 2,967 dollars.
“The cost of gasoline follows the increase in crude oil prices, at a time when the world seeks to find an alternative source of supply to Russian oilsaid Andy Lipow of Lipow Oil Associates.
Policies against inflation
To combat inflation, the Federal Reserve usually raises its benchmark rateswhich affect in the cost of credit that banks provide to their customers, the immediate effect of which is a brake on consumption and investment.
John Williams, president of the New York branch of the Federal Reserve, said the monetary authority “has the right tools” and should act “quickly” to curb inflation with a new rate hike.
“I expect the FOMC (Monetary Policy Committee) to move quickly to get guide rates back to more normal levels this year” i.e. around 2-2.50% vs. 0.75-1.00% today , said the official at a conference in Germany, organized by the Bundesbank and the National Association of Business Economics (NABE).
Another of the alternatives under discussion is Biden’s initiative to raise taxes on the wealthiest and large corporations, in addition to increasing national oil production and freeing part of the national strategic reserves to reduce energy prices.