A Top Official Says the Fed Will ‘Grapple’ With Faster Bond-Buying Taper

The president of the New York Federal Reserve said Omicron could prolong supply and demand mismatches, causing some inflation pressures to last.

John C. Williams, president of the Federal Reserve Bank of New York, said the latest variant of the coronavirus could prolong the bottlenecks and shortages that have caused inflation to run hotter than expected, and is a risk Fed officials will assess as they “grapple” with how quickly to remove economic support.

It is still too soon to know how the Omicron variant, which public health officials in southern Africa identified just last week, will affect the economy, Mr. Williams said Tuesday in an interview with The New York Times. But if the new version of the virus leads to another wave of infections, it could exacerbate the disruptions that have caused prices to rise at their fastest pace in three decades.

“Clearly, it adds a lot of uncertainty to the outlook,” Mr. Williams said of the new variant. He later added that a risk with the new variant is that it “will continue that excess demand in the areas that don’t have capacity, and will stall the recovery in the areas where we actually have the capacity.”