The Federal Reserve chairman warned in a speech before the Senate that the new omicron variant could lead to higher prices well into next year and further complicate America's economic recovery.
The new omicron variant could cause inflation to linger well into next year, according to the Fed chair.
Andrew Harnik is an Associated Press photographer.
The Federal Reserve now sees persistently higher inflation well into next year due to the emergence of the Omicron variant, Powell admitted in remarks before the Senate Banking Committee.
Powell said that Omicron poses downside risks to employment and economic activity.
The stock market hit session lows immediately after Powell made his comments.
The Fed chair warned that the economy and labor market would suffer if there were more concerns about the virus and a rise in cases.
Powell left out the word "transitory" from his remarks on Tuesday, which was a shift from the past when he said higher inflation is "transitory."
The central bank will discuss speeding up the pace of its bond-buying program at an upcoming meeting, according to the Fed chair.
Powell said that it is difficult to predict the persistence of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year. The Federal Reserve expects inflation to moderate eventually, with rates expected to move closer to the central bank's 2% target by the second half of next year.
October's consumer price index surged 6.2% from last year, making it the highest inflation rate in 31 years. Wall Street experts think that inflation is here to stay and that economic growth should remain solid.
There's a problem.
According to the FedWatch tool, just over a third of investors think the Fed will raise rates in early 2021.
The key background is.
President Joe Biden said in a press conference Monday that there was no need for a lockdown in response to the new Covid variant. The omicron strain, which was first reported in South Africa, was labeled a "variant of concern" by the World Health Organization last Friday. Moderna and Regeneron have warned that existing treatments won't be as effective against omicron, even though most health experts have been cautious in predicting how dangerous it will be.
The Federal Reserve is concerned about the impact of omicron impact.
How bad experts think inflation will be is here.
The Federal Reserve will end the Stimulus by June.
