In the prepared remarks for a Senate Committee hearing, Fed Chair Jerome Powell said , “the recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment 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 labor market and intensify supply-chain disruptions,” he added.
Powell also reiterated, inflation is expected to “move down significantly over the next year as supply and demand imbalances abate.” However, “it now appears that factors pushing inflation upward will linger well into next year.” Also, “with the rapid improvement in the labor market, slack is diminishing, and wages are rising at a brisk pace.”
