Omicron variant and inflation, 2 concerns of the week

This week, investors are set to focus on updates on the Omicron variant and inflation. Concerns around both of these factors had stirred up volatility across markets last week.  The two are intertwined. Many have feared that an additional wave of the coronavirus could spur another slowdown in consumer mobility and spending that hits economic activity and corporate earnings. Vaccine-makers and other researchers have yet to determine the extent of Omicron’s transmissibility and severity of illness caused by the variant, or whether it is at least partially resistant to current vaccines.

And yet despite these virus-related fears, monetary policymakers have signaled they are ready to pull back on monetary policy stimulus that had helped support the economy for more than a year-and-a-half during the pandemic. That’s come as inflationary trends have proven stickier than previously expected, given tighter monetary policies could help ease elevated prices.

Investors are set to receive an updated look at the state of inflation later this week, with the Labor Department releasing its November Consumer Price Index (CPI) on Friday. Though the Federal Reserve has typically looked to the core personal consumption expenditures (PCE) index as its preferred gauge of inflation, the CPI has served as another critical datapoint underscoring the extent of price increases impacting Main Street consumers.

https://finance.yahoo.com/

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