Treasury Secretary Janet Yellen said on Thursday that the COVID-19 omicron variant "could cause significant problems" for the global economy, according to Reuters.
Markets tanked after detection of the omicron variant was announced last week, with the Dow Jones Industrial Average dropping 900 points, The Hill reported.
"Hopefully, it's not something that's going to slow economic growth significantly," Yellen said at the Reuters Next conference. "There's a lot of uncertainty, but it could cause significant problems. We're still evaluating that."
Yellen added that the omicron strain could either exacerbate supply chain problems and boost inflation or depress demand and cause slower growth.
Yellen insisted that President Joe Biden's American Rescue Plan was not the primary driver of inflation, which hit 31-year highs in October and is running at more than twice the Fed's flexible inflation target of 2% annually, per Reuters.
The Treasury secretary blamed the rise in inflation mainly on supply chain constraints from the COVID-19 pandemic.
Yellen told the conference that she is ready to retire the word "transitory" to describe the current inflation rate, agreeing with comments made by Federal Reserve Chairman Jerome Powell earlier this week.
Lowering Donald Trump-era tariffs on imported goods from China will not change much, according to Yellen. While she said she was "open" to a visit to China, Yellen said a trip is not currently on her agenda.
Omicron cases have been detected in five U.S. states so far – Hawaii, California, Minnesota, New York and Colorado, as reported by NPR.
Biden signaled that he does not plan to call for any new closures or restrictions on businesses, schools, or other in-person gatherings in response to omicron.
"We are going to fight COVID-19 not with shutdowns or lockdowns — but with more widespread vaccinations, boosters, testing and more," Biden wrote in USA Today on Thursday.
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