Jerome Powell Says Omicron Adds Economic Risks, Inflation Uncertainty

  • In Business
  • 2021-11-29 21:51:36Z
  • By Bloomberg

(Bloomberg) -- Federal Reserve Chair Jerome Powell, in his first public remarks on the omicron variant of the coronavirus, said it poses risks to both sides of the central bank's mandate to achieve stable prices and maximum employment.

Most Read from Bloomberg

  • China Cash Flowed Through Congo Bank to Former President's Cronies

  • 'Pension Poachers' Are Targeting America's Elderly Veterans

  • Reliving the New York Subway Map Debate

"The recent rise in COVID-19 cases and the emergence of the omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation," Powell said in prepared testimony released Monday, a day ahead of his appearance before the Senate Banking Committee. "Greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions."

Powell, in the relatively brief text, didn't discuss specific monetary policy actions or the possibility of changing the pace of the tapering of its asset purchases -- a key issue that other officials have flagged in recent remarks.

Powell -- who a week ago was selected by President Joe Biden for a second term as central bank chief -- will appear before the panel Tuesday at 10 a.m., together with Treasury Secretary Janet Yellen, in the first of two days of congressional oversight hearings related to pandemic stimulus. The House Financial Services Committee will follow with a separate hearing Wednesday.

U.S. central bankers are grappling with fresh uncertainty over the economy following the discovery of the new variant of Covid-19. Governments around the world stepped up restrictions on travel and the World Health Organization warned that the omicron strain could fuel a fresh surge in infections.

Despite strong job growth this year, "there is still ground to cover to reach maximum employment for both employment and labor force participation, and we expect progress to continue," Powell said, adding that joblessness continues to fall "disproportionately" on Blacks and Hispanics.

Even amid the challenges posed by the pandemic, the U.S. economy is powering ahead. JPMorgan Chase & Co. economists have upgraded their estimate for annualized growth to 7% from 5% for the final three months of the year. The boom has fueled high inflation, with consumer prices in October rising at the fastest pace in 30 years.

"Most forecasters, including at the Fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate," Powell said. "It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year."

Fed officials in recent weeks had discussed the possibility of speeding up the pace at which they scale back the central bank's monthly asset purchases, which would give them the option to raise interest rates sooner than otherwise next year if needed to keep price pressures in check.

"I am very open to accelerating the pace of our slowdown in purchases," Atlanta Fed President Raphael Bostic, a voter this year on the policy-setting Federal Open Market Committee, told Fox News in an interview Friday. San Francisco Fed President Mary Daly, who is also a voter this year and has been a dovish voice on policy, told Yahoo! Finance earlier last week that she would accept a faster pace of tapering if inflation continued to run too high. Daly's interview was conducted before the news of omicron broke.

Fed officials will see reports on CPI and employment for November before their final meeting of the year on Dec. 14-15.

(Adds more Powell comment from sixth paragraph.)

Most Read from Bloomberg Businessweek

  • Medical Debt Is Crushing Black Americans, and Hospitals Aren't Helping

  • Wildfires Are Getting Worse, and One Chemical Company Is Reaping the Benefits

©2021 Bloomberg L.P.


More Related News

A Year
A Year's Worth of Nasdaq Tumult Was Condensed Into Three Weeks

(Bloomberg) -- Many ways exist to chart shakiness in the stock market. There's options-derived volatility indexes, price relative to moving averages and...

Fed Takes Key Step in Deciding on U.S. Digital-Coin Issuance
Fed Takes Key Step in Deciding on U.S. Digital-Coin Issuance

(Bloomberg) -- The Federal Reserve took a key step in weighing the creation of its own digital currency, a move it said could help ensure the U.S. dollar's...

NYC Gateway Tunnel Gets Set for Federal Funding as U.S. Raises Priority
NYC Gateway Tunnel Gets Set for Federal Funding as U.S. Raises Priority

(Bloomberg) -- The Gateway commuter-rail tunnel project in New York and New Jersey is receiving a long-awaited priority boost that will make it eligible for ...

Nasdaq 100 Enters Correction as Tech Stocks Resume Slide
Nasdaq 100 Enters Correction as Tech Stocks Resume Slide

(Bloomberg) -- The technology-focused Nasdaq 100 fell into a correction on Thursday, a swift reversal after touching an all-time high in November as a surge ...

Chipmakers Tumble Again in Biggest Weekly Drop Since March 2020
Chipmakers Tumble Again in Biggest Weekly Drop Since March 2020

(Bloomberg) -- Shares of semiconductor companies fell on Thursday, with the group participating in a widespread late selloff for technology stocks that...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Business