Top Biden aide says US economy at 'turning point'

The US economy is at an "important turning point," the top economic advisor to President Joe Biden said Monday, calling for safeguards to be put in place to protect gains made in the labor market, ahead of a key Federal Reserve interest rate decision.

Her remarks come just two days before the Fed is expected to announce its first interest rate cut for more than four years, as inflation eases towards its long-run target of two percent, and the labor market continues to cool.

"Today, we are at an important turning point," White House National Economic Advisor Lael Brainard told the Council on Foreign Relations in New York.

"Inflation is now back down close to pre-pandemic levels, and that means the focus needs to be on safeguarding the gains -- the important gains -- we’ve made in the labor market."

Policymakers will likely weigh whether to cut the Fed's benchmark lending rate by a quarter of a percentage point, or move ahead with a more significant half point cut.

The Fed has a dual mandate from Congress to act independently to ensure both stable prices and maximum sustainable employment, and has indicated in recent months that it was looking more closely at the employment side to its mandate.

In her remarks Monday, Brainard touted the Biden administration's efforts to support workers through the pandemic, and its "clear commitment to respecting the independence of the Federal Reserve in fighting inflation."

She contrasted that with former president Donald Trump's repeated criticism of the US central bank during his term in office.

Trump has repeatedly criticized Fed chair Jerome Powell, who he first appointed to the top job at the US central bank, and indicated he would not look to reappoint him when his current term ends in 2026.