Economy, Russia-Ukraine War

Ukraine war, inflation, pandemic pose risk to US economy: Fed report

Further surprises in inflation, interest rates could negatively affect financial system, central bank warns

Övünç Kutlu  | 10.05.2022 - Update : 10.05.2022
Ukraine war, inflation, pandemic pose risk to US economy: Fed report

ANKARA 

Russia's war on Ukraine, high inflation, and the coronavirus pandemic continue to create uncertainty and pose risk to US economic activity and financial conditions, the Federal Reserve said Monday in a report.

Implications of the war in Ukraine for American and global economies are highly uncertain and the war-related events are likely to create additional upward pressure on inflation and weigh on economic activity," the Fed said in its Financial Stability Report for May 2022.

"After deteriorating early in the period because of the emergence and spread of the highly contagious Omicron variant, the pandemic outlook has improved but remains uncertain," it added.

The Fed noted that financial markets experienced high volatility and some strains on market liquidity, while business and household debt increased last year.

"Rising inflation, supply chain disruptions, and ongoing geopolitical events might pose risks to the ability of some businesses and households to service their debts," it added.

"Further adverse surprises in inflation and interest rates, particularly if accompanied by a decline in economic activity, could negatively affect the financial system," the central bank warned.

Former US President Donald Trump decided in 2018 to impose a 25% tariff on steel and a 10% tariff on aluminum imports, citing national security concerns.

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