(Bloomberg) – Federal Reserve Chairman Jerome Powell, in his first public comments on the omicron variant of the coronavirus, said it poses risks to the central bank’s two main goals: price stability and maximum employment. .
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“The recent increase in covid-19 cases and the emergence of the omicron variant pose risks to employment and economic activity, as well as greater uncertainty for inflation,” Powell said in prepared testimony published Monday, one day prior to his appearance before the Senate Banking Committee. “Increased concern about the virus could reduce people’s willingness to work in person, slowing progress in the job market and intensifying supply chain disruptions.”
Powell, in a relatively brief text, did not touch on topics such as specific monetary policy actions or the possibility of changing the pace of the stimulus reduction, a key issue that other officials have pointed to in recent comments.
The Fed leader, who a week ago was nominated by President Joe Biden for a second term as head of the central bank, will appear before the panel on Tuesday at 10 a.m., along with Treasury Secretary Janet Yellen, at the first of two days of congressional oversight hearings related to the pandemic stimulus. The House Financial Services Committee will follow up with a separate hearing on Wednesday.
Currently, US central bankers are grappling with new uncertainty about the economy following the discovery of the new variant of COVID-19, as governments around the world tighten their travel restrictions. For its part, the World Health Organization (WHO) warned that the omicron strain could drive a further increase in infections.
Even amid the challenges posed by the pandemic, the US economy continues to thrive. Economists at JPMorgan Chase & Co. have updated their annualized growth estimate for the last three months of the year from 5% to 7%. The boom has fueled high inflation, while consumer prices in October rose at the fastest pace in 30 years.
“Most forecasters, including the Fed, continue to expect inflation to decline significantly over the next year as supply and demand imbalances diminish,” Powell said. “It is difficult to predict the persistence and effects of supply constraints, but it now appears that the factors driving inflation up will continue well into next year.”