Biden brushes off risks of strong US dollar, says British PM Truss’ policies a ‘mistake’
US President Joe Biden dismissed the risks of a strong US dollar and instead blamed anaemic growth and policy missteps in other parts of the world for dragging down the global economy.
“I’m not concerned about the strength of the dollar, I’m concerned about the rest of the world,” Biden said on Saturday during a campaign stop in Portland, Oregon. “The economy is strong as hell.”
Biden’s comments stand in contrast with top leaders from other countries, who have increasingly voiced concerns about how the rising greenback is fueling inflation in their own economies.
The dollar has climbed roughly 15 percent this year as the Federal Reserve embarked on an aggressive campaign to raise interest rates to tamp US price increases.
The impact of the rising dollar was a key topic among delegates at the International Monetary Fund and World Bank, which concluded their fall meetings Saturday in Washington.
Fed officials heard a constant barrage of concerns from other nations about how the surge in the greenback has raised the cost of their imports and increased inflation, setting off their own cycles of tightening.
But with the Fed on track to continue lifting borrowing costs through the end of the year, Biden sought to deflect blame for the slowing global economy.
On Saturday, he criticized UK Prime Minister Liz Truss’ original economic plan that caused turmoil in the markets, saying it was a “mistake”.
“It’s predictable. I mean, I wasn’t the only one that thought it was a mistake,” Biden said on Saturday during a visit to Portland, Oregon, when asked about Truss reversing course.
“I think that the idea of cutting taxes on the super wealthy at a time when, anyway, I just think, I disagreed with the policy,” the president added. “But that’s up to Great Britain to make that judgment, not me.”
“The problem is the lack of economic growth and sound policy in other countries, not so much ours,” he said, reiterating his administration’s insistence that inflation is “worldwide”.
Truss on Friday fired her Chancellor, Kwasi Kwarteng, and hit reset on her tax policies, announcing that she would abandon a plan to freeze the corporation tax next year.
The initial plans sparked market turmoil and calls for Truss to reverse course after Kwarteng on Sept 23 announced the biggest set of unfunded UK tax cuts in half a century.
Her policies, including a controversial tax cut for the wealthy that she’s since reversed, sparked a plunge in the pound and forced the Bank of England to step in to support gilts.
The turmoil spilled over into global markets, as traders wary of further volatility sought refuge in havens, further boosting the dollar.
But beyond Britain, the strong dollar continues to weigh on the global economy, particularly poorer nations that rely on food imports.
The destructive combination of the soaring greenback, high interest rates, and elevated commodity prices is eroding their power to pay for goods typically priced in the dollar and compounding a worsening global food crisis, among others.
Truss is keeping other tax cuts in place, leaving open the possibility of further market backlash on Monday.