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Jerome Powell Is Confronting a World of Risks to the Fed’s Taper Timeline

Bloomberg Economics modeling shows how shocks at home and abroad could derail the U.S. recovery and force a course correction from the Fed. 

Uncertainty is pulling the Fed away from its carefully calibrated path to U.S. recovery. 

Uncertainty is pulling the Fed away from its carefully calibrated path to U.S. recovery. 

Photographer: Stefani Reynolds/Bloomberg

What would it take to knock the U.S. recovery off course and send Federal Reserve policy makers back to the drawing board? Not much — and there are plenty of candidates to deliver the blow.

From one direction: U.S. debt-ceiling deadlock, China property slump or simply an extension of Covid caution could hit growth and jobs — taking the Fed’s proposed taper of bond purchases off autopilot, and pushing its first interest-rate increase back to 2024 or later. From the other: Sustained supply-chain snarl-ups could keep inflation stubbornly high and unmoor inflation expectations — forcing an acceleration of the taper, and an early rate liftoff in 2022.