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Powell Warns More Powerful COVID Strain a Plausible Outcome

FED

Q: How does the divergence in global growth / multispeed global recovery impact Fed policy?

  • A: The recovery has been uneven. Some is related to countries having little access to vaccines and having significant Covid outbreaks; others such as the US in particular are rebounding strongly. Now Europe is having a strong rebound.
  • It affects our policy in a couple of ways: in general, economies and through financial markets and through trade are deeply interconnected. A stronger global economy will lead to more U.S. exports. To the extent the global economy is week and the United States is strong, it will wind up some of our demand through imports rather than having a lot of exports.
  • Another way is more on the risk side. As long as there's time and space for the development of new strains, no one is finally safe.
  • There's no reason these strains can't keep coming and one more powerful than the next. We don't know that, but that's certainly a plausible outcome. As vaccinations rise, econ activity can come back.
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