The Chairman of the Federal Reserve (Fed), Jerome Powell, warned this Tuesday that the rise in cases of covid-19 and the new variant of the coronavirus, omicron, could slow progress in employment and economic growth, in addition to adding a greater “uncertainty” on inflation.
This was indicated before the Senate banking committee, in an appearance with the Secretary of the Treasury, Janet Yellen. The announcement comes at a delicate time for the US economy with inflation at levels not seen in 30 years in the country.
“Increased concern about the virus could reduce people’s willingness to work in person, slowing down progress in the labor market and intensifying problems in the workplace. supply chains“Powell said. As a consequence, he added,” the risks of higher inflation have increased.
In spite of everything, Powell pointed out that the Fed’s estimates still point to inflation “falling significantly” over the next year as the supply and demand imbalances are resolved. However, and although he indicated that it is “difficult” to predict supply problems, he also stressed that “it seems that the factors that push up inflation will last well into next year.”
“We understand that high inflation imposes significant burdens, especially for those least able to meet the higher costs of essential goods such as food, housing or transportation. We are committed to our goal of price stability. We will use our tools to support the economy and a solid labor market, as well as to prevent high inflation from taking hold, “concluded the central banker.
In October, year-on-year inflation in the US stood at 6.2%. The US central bank has kept interest rates in the range of between 0% and 0.25% since March 2020, with the arrival of the pandemic, to support the economy, and then launched a multimillion-dollar monthly program for the purchase of bonds, whose gradual withdrawal began this November.
The Fed will hold its last monetary policy meeting of the year on December 14 and 15, in which it will present its new macroeconomic forecasts, which in September stood at a growth rate of 5.9% and inflation of 4.2% for late 2021.