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The rise of Covid-19 cases and the new reform of Omicron threaten to re-emerge from the financial crisis and exacerbate the effects of the recession, Federal Reserve chairman Jay Powell is due to tell U.S. lawmakers on Tuesday.
In a statement to the media, Janet Yellen, Secretary of State for Finance, Powell said that although the demand for consumers in the US is still high and workers are returning to work, the potential for epidemic problems is detrimental to the economy.
“The recent rise in Covid-19 cases and the emergence of the Omicron brand poses significant employment and economic risks and uncertainties for economic growth,” he said in a preliminary statement released Monday.
“Excessive stress for the virus can reduce people’s motivation to work independently, which can delay the progress of the labor market and increase job losses.”
Yellen, who will testify alongside Powell on Tuesday, reiterated her warnings as she urged people to get vaccinated.
“Our economic growth cannot be separated from our progress in fighting the epidemic, and I know we are all following Omicron’s stories,” he said. “The bottom line is that our best protection against the virus is vaccination. People need to be vaccinated and encouraged.”
Yellen added that Congress’s failure to raise debt could also “eliminate” the current economic rise. According to a recent Treasury estimate, the government is at risk of running out of money after December 15th.
Powell, who recently elected for the second time with President Joe Biden, and Yellen will meet with the Senate Banking Committee at a very difficult time. US steel, which has been battling higher inflation rates for nearly 30 years.
Rising prices in some areas have been “notable”, Powell stressed in his remarks, which makes the rise in inflation “next year”. He still expects inflation to decline “sharply” next year, however, due to metabolic imbalances and demand.
His comments come amid a heated debate among central bank officials over how the Fed should manage this period of low inflation, which seems to be continuing for longer than expected.
Richard Clarida, the incumbent vice president who will be replaced by Ambassador Lael Brainard if confirmed by the Senate, opened door earlier this month at the Fed to speed up the so-called taper or reduce its $ 120bn purchasing program. It began to repatriate bond purchases this month at a rate of $ 15bn per month, indicating that the incentive will expire in June.
This possibility was raised in Omicron’s diversity before a global warning, however, brought serious uncertainty in the course of Fed policy.
Powell also vowed Monday that the Fed will take action to curb inflation if necessary, accepting payments made by rising prices. Reducing inflation is a major concern for Biden ‘s governors, whose recent finances are facing many challenges from Republicans and other established Democrats.
“We understand that rising inflation poses significant burdens, especially for those who cannot afford the high cost of basic necessities such as food, housing, and transportation,” Powell said. “We will use our resources to support the economy and the labor market and to prevent inflation from stabilizing.”
Advertisers expect the Fed to raise interest rates twice next year, with the first adjustment for the third quarter.
The economy advanced Powell’s comments, with yields on the two-year record – which is closely linked to monetary policy – down 0.01 percent of the day to 0.48 percent. It traded with yields of 0.51 percent pre-production evidence.
Additional reports by Eric Platt
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