Former Obama administration adviser Steve Rattner said on Thursday that the Biden administration is not entirely to blame for soaring inflation.
According to Rattner, continued public spending of large amounts of COVID-19 stimulus is partly to blame.
Rattner, who served as an adviser to the Secretary of the Treasury under the Obama administration made the comments during an interview on MSNBCโs โMorning Joe.โ
He also said he expects interest rates to remain high โfor the foreseeable future.โ
โI think weโre going to have higher rates for the foreseeable future, but the economy itself is actually doing okay,โ Rattner said.
He also noted that the Federal Reserveโs moves to raise interest rates byย 75 basis points are โextremely large by Fed standards.โ
The central bank initiated another 75 basis-point hike on November 2 to a target range of 3.75โ4.00 percent, marking the sixth rate increase this year and the fourth consecutive 75-point increase in 2022.
Rattner said that inflation has skyrocketed over the past year and that the โFed essentially did nothing for almost a year,โ meaning the central bank is now having to โplay catch-upโ while inflation remains stubborn.
When asked why the soaring cost of living is not coming down, Rattner pointed to a number of reasons, including a large number of unfilled jobs in this marketplace, and excess savings in the economy, bolstered by the pandemic-related stimulus.
โWe poured roughly $2.5 trillion into Americansโ pockets during the pandemic, for lots of good reasons, including money they didnโt spend,โ said Rattner, who is chairman and CEO of the investment management firm Willett Advisors LLC.
“Weโve been gradually working that off. But itโs still well over $1.5 trillion, almost $2 trillion.
“And so consumers are still spending, even though their real incomes are going down.”
However,ย Rattner cited data showing that gross domestic product (GDP) increased at an annual rate of 2.6 percentย in the third quarter of 2022, up fromย a decrease of 0.6 percent in the second quarter.
โThere are good things to be said about the economy that somehow get lost in the whole inflation figure,โ he said.
He continued by noting that โthe Biden administrationโs first rescue plan was probably too muchโ and came at a time when the U.S. economy was โalready on the path to recovery from COVID.โ
โBut it wasnโt what created 8 percent inflation,โ Rattner said.
“A lot of it was โฆ the Fed put many more trillions into the economy than we did through the American Rescue Plan.
“And so, yeah, itโs not all on Biden.”
Rattnerโs comments echo those ofย New Hampshire Gov.ย Chris Sununu, who warned last month thatย spending allocated under the American Rescue Plan and infrastructure package has not yet been spent, and could further exacerbate inflation over the next few years as it is released into the economy.
Elsewhere, Rattner said he believes that Congress had ultimately โsaved the president from himselfโ by failing to pass the Build Back Better plan, which likely would have added to inflationary pressures.