Fed to Consider Faster Bond-Buying Taper, Inflation A Key Concern — Powell

Source: FT

With financial markets selling off on fears over the new COVID-variant Omicron, Fed Chair’s signal support for faster tapering showing taming inflation is a top priority. DXY down -0.19%, EUR USD up +0.23%

• On Tuesday, Jay Powell effectively dumped the Fed’s previous stance on rising inflation and declared his approval of faster tapering of Fed’s massive bond-buying program, giving policymakers room to raise interest rates quicker than anticipated.
• Powell sent a definite message to markets that combating inflation is the main priority for a central bank that has been focusing on boosting demand and employment in the last two years.
• Kathy Bostjancic, the chief US financial economist at Oxford Economics, stated that inflation has front-run the plans of the Fed.
• In congressional testimony this week, the Fed Chair recognized the emergence of the Omicron variant, describing it as a potential risk to economic growth but was yet to be “baked into” the Fed’s outlook.
• Powell cautioned that price pressures that were only in a few sectors of the economy had spread out.