The Fed Says Inflation Is Hotter Than Expected — But It Should Cool Next Year

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Federal Reserve Chairman Jerome Powell speaks during a Senate Banking Committee hearing in Washington, D.C., on July 15. The Fed issued new economic projections at the conclusion of its policy meeting on Wednesday.

Al Drago/Bloomberg via Getty Images

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Al Drago/Bloomberg via Getty Images

Economy
High Meat Prices Are Helping Fuel Inflation, And A Few Big Companies Are Being Blamed

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Fruits and vegetable are displayed at an area grocery store in Washington, D.C., on Aug. 12. Inflation has surged this year, although the Federal Reserve continues to believe the spike will be temporary.

Brendan Smialowski/AFP via Getty Images

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Brendan Smialowski/AFP via Getty Images

Economy
U.S. Hiring Slows Sharply As Latest Coronavirus Surge Slams The Brakes On The Economy

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A «Now Hiring sign is shown near the entrance to a Ross department store on Sept. 21, in Hallandale, Fla. Employers added far fewer jobs than expected in August as the Delat variant continues to spread.

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Joe Raedle/Getty Images

A «Now Hiring sign is shown near the entrance to a Ross department store on Sept. 21, in Hallandale, Fla. Employers added far fewer jobs than expected in August as the Delat variant continues to spread.

Joe Raedle/Getty Images

But a lot could change with the Delta variant

The sharp drop in hiring last month coincided with a spike in new coronavirus infections, which likely discouraged people from traveling, eating out and attending live entertainment.

The Fed has made clear that the pandemic could change economic conditions as the highly-infectious Delta variant continues to spread.

«The path of the economy will depend significantly on the course of the virus, the Fed said in a statement. «Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain.

The Fed has promised to provide ample warning before any policy change, in hopes of calming investors. The stock market was already jittery this week over the threat of a debt default by Chinese property developer Evergrande Group, as well as a drawn-out battle in Washington, D.C., over Congressional efforts to raise the federal debt ceiling.

This week’s meeting also comes at a sensitive moment for Jerome Powell, whose term as Fed chairman expires in February.

President Biden has to decide whether to reappoint Powell — a Republican who was promoted to the chairman’s seat by former President Donald Trump — or go with an alternate candidate as some progressive Democrats have urged him to do. A possible alternative is Lael Brainard, who currently serves on the Fed’s Board of Governors.