Fed chair says omicron variant poses risks but Fed sees rapid growth

By Ovunc Kutlu

ANKARA (AA) US Federal Reserve Chair Jerome Powell said Wednesday that the omicron coronavirus variant poses risks to the economy but the Fed sees rapid economic growth nevertheless.

"Rising COVID cases in recent weeks, along with the emergence of the omicron variant, pose risks to the outlook," Powell said in a news conference after the Fed's much-anticipated two-day meeting.

"Withstanding the effects of the virus and supply constraints, FOMC participants continue to foresee rapid growth," he said, referring to the Federal Market Open Committee.

The Fed removed the word “transitory” from describing inflation and said it will conclude tapering faster by doubling its asset purchases. It also signaled three rate hikes for 2022 to tame record inflation.

"In light of the strengthening labor market and elevated inflation pressures, we decided to speed up the reduction in our asset purchases," said Powell. "Economic developments and changes in the outlook warranted this evolution of this monetary policy, which will continue to provide appropriate support for the economy.”

Powell emphasized that economic activity is on track to expand at a robust pace this year, reflecting progress on vaccinations and the reopening of the American economy.

"Aggregate demand remains very strong, buoyed by fiscal and monetary support, and a healthy financial position of households and businesses," he said.

The Fed Chair, however, stressed that some problems have been larger and longer-lasting than anticipated.

"Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation; in particular, bottlenecks and supply constraints are limiting how quickly production can respond to higher demand in near-term," he said.