Fed Chair Powell to tell Congress that omicron variant could threaten U.S. economic recovery
Jerome Powell wrote that the omicron variant poses 'downside risks to employment and economic activity'
Yellen, Powell testify at Senate Banking Committee hearing
The Senate Banking Committee holds hearing on oversight of the CARES Act, with testimony from Janet Yellen and Jerome Powell.
Federal Reserve Chairman Jerome Powell is set to tell Congress on Tuesday that the omicron variant could threaten the U.S. labor market and cloud the inflation forecast.
"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," Powell wrote in prepared remarks that he will deliver before the Senate Banking Committee on Tuesday.
"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."
Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill. (AP Photo/Susan Walsh, Pool, File)
Stocks suffered the worst drop of the year on Friday after the World Health Organization named omicron a "variant of concern."
Markets rebounded Monday, as the Dow Jones Industrial Average rose 0.68%, the S&P 500 rose 1.3%, and the Nasdaq Composite jumped 1.8%.
STOCKS REBOUND AS OMICRON FEARS EASE, OIL JUMPS
Inflation concerns have roiled investors and consumers in recent months as prices for Americans shot up 6.2% in October compared to the same month in 2020, the highest 12-month jump since 1990, according to the Labor Department.
Syringes filled with the Johnson & Johnson vaccine are shown, Thursday, May 13, 2021, at a mobile vaccination site at the Greater Bethel Church in Miami. ((AP Photo/Wilfredo Lee))
Powell said that while the Fed expects inflation to slow down over the next year, the U.S. could continue seeing high inflation in 2022.
"It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year," Powell wrote in his prepared remarks.
The Fed announced earlier this month that it will start tapering its $120 billion in monthly bond purchases by $15 billion a month, which would reduce some of those inflation pressures.
President Joe Biden holds his face mask and waves as he exits Air Force One at Capital Region International Airport, Tuesday, Oct. 5, 2021, in Lansing, Mich. (AP Photo/Evan Vucci)
President Biden said Monday that he doesn't see the need for lockdowns, cautioning that the omicron variant is a "cause for concern, not a cause for panic."
"Sooner or later, we're going to see cases of this new variant here in the U.S.," Biden said. "If people are vaccinated and wear their mask, there’s no need for the lockdown."
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The 7-day moving average for new COVID-19 cases surged to around 160,000 a day in early September, but fell to 72,008 on Sunday.
The Associated Press contributed to this report.