With cases of the new Omicron variant being reported on several continents now, there is a good chance that it is already present in the United States. We still know almost nothing definitive about whether Omicron is more transmissible or deadly than other coronavirus variants, but it adds to the downside risks, which were already on the rise with the winter surge in infections in the Northeast and the Midwest. Under those circumstances, we think it is unlikely that the Fed will accelerate the pace of its QE taper at this month’s FOMC meeting, which could have paved the way for interest rate hikes earlier next year. There is some debate about whether Omicron will add to inflationary pressure if it affects supply more than demand, but the collapse in energy prices suggest that, initially at least, the impact will be strongly disinflationary.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services