U.S. Federal Reserve chair Jerome Powell says the emergence of a new聽CCP (Chinese Communist Party) virus聽variant poses a risk to employment and inflation in the country.
Powell is set to deliver聽public remarks鈥攈is first on the new variant鈥攂efore the聽Committee on Banking, Housing, and Urban Affairs and Senate lawmakers on Tuesday.
new variant of the novel coronavirus, named聽Omicron, was first detected by South Africa, the country鈥檚 health minister, Joe Phaahla, announced last Thursday.
re is growing concern among scientists about what Omicron鈥檚 impact might be, given that it has聽an聽unusual combination of mutations and may be able to evade immune responses or be more transmissible.
“ 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 on Monday.
“Greater concerns about the virus could reduce people鈥檚 willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions,” the chairman said.
Powell did not discuss any proposed聽monetary policy actions by the central bank or whether officials are considering changing the pace of the聽tapering of its asset purchases, but said, “We understand that our actions affect communities, families, and businesses across the country.”
“Everything we do is in service to our public mission. We at the Fed will do everything we can to support a full recovery in employment and achieve our price-stability goal,” he concluded.
Fed policymakers unanimously decided at last month鈥檚 meeting to begin dialing back the central bank鈥檚 $120 billion in monthly purchases of Treasuries and mortgage-backed securities聽by $15 billion per month, after unleashing extraordinary monetary support for governments’ pandemic聽lockdowns that paralyzed the economy. 聽so-called “taper” will conclude in June.
Powell is set to appear before the Senate on Tuesday alongside聽Treasury Secretary Janet Yellen, as they are both required to testify before Congress on a quarterly basis under the聽March 2020聽COVID-19 economic-relief legislation, also known as the聽CARES Act.
“Of course, the progress of our economic recovery can鈥檛 be separated from our progress against the pandemic, and I know that we鈥檙e all following the news about the Omicron variant,” Yellen said in prepared remarks. “As the president said yesterday, we鈥檙e still waiting for more data, but what remains true is that our best protection against the virus is the vaccine. People should get vaccinated and boosted.”
As federal officials are pulling back bond purchases in line with聽falling unemployment levels, it is unclear how the emergence of聽Omicron will affect those plans.
Elsewhere in his prepared remarks, Powell will deliver more direct comments on inflation, saying that “inflation is elevated, largely reflecting factors that are expected to be transitory,” something the Fed has long maintained.
“Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses,” Powell聽will say, while noting that, “risks to the economic outlook remain.”
Officials from the World Health Organization (WHO)聽have said they聽are聽monitoring the new Omicron variant, also called B.1.1.529, and have labeled it a “variant of concern,” due to its numerous mutations.
Pezou : Fed Chief Says Omicron Poses Risk to Employment, Inflation, Supply Chains