The omicron variant of COVID-19 could extend some of the challenges and supply chain tension that have led to higher inflation, and Federal Reserve (Fed) officials will need to take this into account when deciding how to withdraw their monetary policy. supportive, said New York Fed Chairman John Williams.
“Clearly, it adds a lot of uncertainty to the landscape“Williams said, referring to the omicron variant of COVID-19, during an interview with the New York Times published Wednesday.
If the variant leads to continued demand for goods and services currently facing shortages, and if it halts the recovery in other areas, that could lead to a “general rebound somewhat slower”He declared.
It could also “increase those inflationary pressures, in those areas of high demand”He added.
Last month, the Fed began reducing its purchases of Treasuries and mortgage-backed securities of $ 120 billion a month at a rate that would put it on track to complete the liquidation of its bond purchase program by mid-2022.
On Tuesday, Fed Chairman Jerome Powell told the US Senate Banking Committee that monetary policy makers at the US central bank would discuss at the December 14-15 meeting whether to end the program for a few months. earlier than anticipated.
Williams did not say whether he supports accelerating the gradual reduction in asset purchases, but noted that Fed officials will have a lot to weigh at their next policy meeting, including more data on inflation, employment and the economic effects of the variance. omicron.
“The question is: Would it make sense to end those purchases a little earlier, maybe a few months, given how strong the economy is? “ Williams said. “That’s a decision, a discussion, that I hope we have to deal with.”
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