Inflation could continue to rise next year, in part because of the COVID-19 variant Omicron, Fed Chairman Jerome Powell told Congress – .

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Inflation could continue to rise next year, in part because of the COVID-19 variant Omicron, Fed Chairman Jerome Powell told Congress – .


Federal Reserve Chairman Jerome Powell has warned Congress that while the Federal Reserve continues to expect inflation to fall “significantly” over the next year, it “now appears that factors that push inflation up will persist until next year ”.
The new variant of COVID-19 Omicron could have a negative impact on jobs and inflation, Powell told Congress on Tuesday in his prepared remarks.

“The recent increase in COVID-19 cases and the emergence of the Omicron variant present downside risks to jobs and economic activity and increased uncertainty for inflation. Greater concerns about the virus could reduce people’s willingness to work in person, which would slow progress in the job market and intensify supply chain disruptions, ”said Powell. He was appearing at a hearing before the Senate Banking, Housing and Urban Affairs Committee to witness the economic recovery after the pandemic.

The World Health Organization has reported Omicron as COVID worrying variant Friday: It appears to be spreading rapidly, and it is not yet clear how effective existing vaccines are against it. According to Dr Anthony Fauci, it will take about two weeks to learn more about its transmissibility, severity and other characteristics.

The Biden administration moved quickly to try to slow the spread of the new variant in the United States, imposing travel restrictions on eight countries in southern Africa. Authorities are also urging Americans to get vaccinated or get vaccinated. Monday, President Biden sought to calm Americans down, characterizing the variant as a cause for concern, but not for panic.

As Powell acknowledged that the economy continues to strengthen and labor market conditions are still improving, he also reminded senators that over the summer the fast-spreading Delta variant has slowed down. economic recovery and intensified supply chain disruptions.

At the same time, Americans have come under fire with higher-than-expected prices as the United States struggles to reopen. Last month’s Consumer Price Index showed inflation had risen at its fastest annual rate in over 30 years at 6.2%.

“Supply and demand imbalances linked to the pandemic have contributed to notable price increases in some regions. Supply chain issues have made it difficult for producers to meet high demand, especially for goods. Increases in energy prices and rents also push inflation up, ”said Powell. said during his remarks.

The remarks about inflation echo Powell’s past claims that it could persist until the third quarter of 2022.

“We understand that high inflation imposes significant burdens, especially on those less able to afford the higher costs of basic necessities like food, shelter and transportation,” said Powell. “We are determined to achieve our goal of price stability. We will use our tools both to support the economy and a strong labor market, and to prevent higher inflation from taking hold. ”

Treasury Secretary Janet Yellen also testified before senators on the state of the economic recovery after the pandemic on Tuesday. Yellen a dit if the United States wants to bring inflation down, it needs to make progress with the pandemic and when it does, it expects prices to return to normal in the second half of next year.

Meanwhile, the United States continues to make progress in reducing unemployment. The Ministry of Labor will release the employment report for November on Friday. Last month, the economy created 531,000 higher-than-expected jobs and revised upward the two previous reports, after disappointing figures in September and August. Last month, the unemployment rate fell to 4.6%.

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