Fed’s Bostic: Infection spike due to Delta variant could slow US recovery

Anil Panchal FXStreet

A new rise in coronavirus infections driven by the more virulent Delta variant could cause consumers to "pull back" and slow the U.S. recovery, Atlanta Federal Reserve President Raphael Bostic said, per Reuters.

The policymaker also mentioned, at Bostic said at a virtual event hosted by the National Association of Black Journalists’ Business Journalism Task Force, that these infections are adding trends in some parts of the country were "troubling."

Additional comments…

US may be in a different inflation regime than before.

It's still not determined if price hikes will all prove to be transitory.

We're 'getting close to a time' when tapering will be appropriate.

Requires 'a lot of work' to understand whether last couple of months of high inflation will be the 'new normal'.

At this point feels US will revert back to 2% inflation.

Goal would be for balance sheet to become 'proportionately smaller' in relation to the economy once the crisis is past.

If covid infections spike 'people will pull back' and slow recovery.

Attended briefing today on 'troubling' rise of delta variant infections in some regions.

Market implications…

Given the Fed policymaker’s concern over the fresh virus implications, the market sentiment weighed following the release. However, an early hour of Asia failed to react to the update except for keeping AUD/USD pressured.

Read: AUD/USD stays directed to yearly low under 0.7500, RBA’s Lowe eyed

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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