US Fed Chair Signals Faster Tapering Conclusion

US Federal Reserve Chair Jerome Powell signaled Tuesday a faster conclusion of tapering asset purchases in the face of rising inflation.

"The economy is very strong and inflationary pressures are high. It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases  perhaps a few months sooner," he said in testimony before the Senate Banking Committee.

Powell said Federal Open Market Committee (FOMC) members will discuss the possibility of concluding tapering quicker at their next meeting on Dec. 14-15.

The FOMC announced after the conclusion of its two-day meeting on Nov. 3 that it will start winding down its $120 billion asset purchases this month and it is expected to be concluded by mid-2022.

Powell's comments pushed US indices lower with the Dow Jones losing more than 600 points before 1.30 p.m. EDT.

Investors were expecting Powell to say the Fed would increase asset purchases to provide liquidity in the markets against the rising risks of the new coronavirus variant, omicron, that merged in South Africa.

"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 told the committee. "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." -