The president of the Federal Reserve Bank of Kansas City, Esther Georgesaid Tuesday that it would be appropriate for the Fed to act earlier in reducing its balance sheet compared to the last tightening cycle, as reported by Reuters. George went on to say that his own preference would be to deplete the balance sheet sooner rather than later.
The Fed’s current very accommodative monetary policy stance is ‘out of sync’ with the economic outlookhe added, adding that strong fundamentals will continue to support strong consumption growth.
On the impact of the increase in Omicron infections, George said the increase is likely to affect the labor force participation rate and further delay the turnover of spending from goods to services. However, he noted that economic activity, especially when it comes to spending, has become more resistant to spikes in infection rates by covid-19 and that the labor market seems tight.
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