But this pace might no longer be appropriate, Powell suggested.
“We’re going to a have a discussion about accelerating that taper,” at the upcoming December meeting, he added. The central bank will give and update on its policies on December 15.
Until then, economists — at the Fed and elsewhere — will get another look at the US labor market, with the November jobs report due on Friday. And the public might know more about the new Omicron variant of the coronavirus by then as well.
It’s about learning about the transmissibility, the ability of existing vaccines working against it and about the severity of the illness if contracted, Powell said.
“Then and only then we can make an assessment on the effect on the economy,” he added.
Let’s stop saying ‘transitory’
“Generally speaking the higher prices we’re seeing can be traced back to the pandemic,” Powell said. But the increases are now broader, and the upward pressure on inflation is no longer isolated, he added.
But speaking of inflation, Powell made another big statement: Let’s stop using the word “transitory”, one of the pandemic buzzwords to describe inflation.
The Federal Reserve uses “transitory” to describe the Covid-era jump in prices, which the central bank believes to be temporary. Although temporary sounds like it should be short-term, prices have been on the rise for a while now.
The traditional meaning of “transitory” is not what the Fed thinks it means at all. According to the central bank, transitory means it won’t leave any marks on the economy once the trends reverse again… whenever that may be.
“Everything is transitory. Life is transitory,” said Pennsylvania Senator Pat Toomey during Tuesday’s hearing.
“It’s probably a good time to retire that word and explain what we mean,” Fed Chairman Jerome Powell said in response.
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