On Wednesday, Federal Reserve Chairman Jerome Powell pushed back against the narrative being spread by the Biden Administration, stating that the massive rise in inflation has not been caused by the invasion of Ukraine.
As recently as Monday, The White House has claimed that “the biggest single driver of inflation [is] Putin’s war against Ukraine.” However, when Powell testified before the Senate Banking Committee, he was asked by Senator Bill Hagerty, R-Tenn., if Biden’s claims were true.
“I realize there are a number of factors that play a role in the historic inflation that we’re experiencing: supply chain disruptions, regulations that constrain supply, we’ve got rising inflation expectations and excessive fiscal spending, But the problem hasn’t sprung out of nowhere,” Hagerty said. “In January of 2021, inflation was at 1.4%. By December of 2021, it had risen to 7% — a fivefold increase. Now, since the war in Ukraine began in late February, the rate of inflation has risen incrementally another 1.6% to a current level of 8.6%. So again, from 7% to 8.6%.”
Hagerty then asked, “Given how inflation has escalated over the past 18 months, would you say that the war in Ukraine is the primary driver of inflation in America?”
Powell’s response was blunt and damaging to Biden’s claims. “No, inflation was high before, certainly before the war in Ukraine broke out,” he said.
Powell also told Congress that the actions taken by the Federal Reserve in order to combat rising inflation may trigger a recession.
Others, however, believe that a recession is all but guaranteed.
“Look, nothing is certain, and all economic forecasts have uncertainty,” Larry Summers, former treasury secretary, said Sunday on NBC. “My best guess is that a recession is ahead.”
Summers explained, “I base that on the fact that we haven’t had a situation like the present with inflation above 4% and unemployment beyond 4% without a recession following within a year or two. And so I think the likelihood is that in order to do what’s necessary to stop inflation the Fed is going to raise interest rates enough that the economy will slip into a recession.”
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