Last Updated on June 23, 2022
Federal Reserve Chair Jerome Powell dismissed the notion that the war in Ukraine is the driving factor behind inflation. The Biden Administration has routinely blamed the conflict for rising fuel costs and surging inflation, both of which were climbing prior to the conflict. The administration has referred to inflation as the “Putin price hike” on a number of occasions.
“Putin’s Price Hike hit hard in May here and around the world: high gas prices at the pump, energy, and food prices accounted for around half of the monthly price increases,” Biden said in a statement not long after this month’s inflation report was released. Inflation is now at its highest rate since 1981.
Not long after inflation soared past a 40-year high, Powell has made it clear that ““inflation was high before” the Feb. 24 Russian invasion of Ukraine.”
Powell, who was recently confirmed to another term as Fed chair, made the comments during a committee hearing.
“I realize there are a number of factors that play a role in those 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,” said Senator Bill Haggerty (R-TN).
“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%.”
Haggerty then asked Powell, “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?”
“No, inflation was high before — certainly before the war in Ukraine broke out,” Powell said.
“I’m glad to hear you say that,” Haggerty replied. “The Biden administration seems to be intent on deflecting blame and as recently as just this past Sunday spread the misinformation that Putin’s invasion of Ukraine is the ‘biggest single driver of inflation.’ I’m glad you agree with me that that is not the truth.”
Powell went on to add that the war in Ukraine has caused inflation to climb on some level, especially in terms of commodity prices.
“The increase in commodity prices are clearly connected to the war in Ukraine. And so that that part of inflation would be certainly much lower than it is without the war in Ukraine,” Powell said.
The Federal Reserve recently announced its largest rate hikes since 1994 in an effort to combat inflation.