Robert Robert Kaplan, chairman of the Dallas Fed, said on Friday that he was closely watching any impact of novel coronavirus's Delta variant on the economy and that if economic growth slowed sharply, he might need to adjust his view on the size reduction policy "slightly".

"Delta variants are spreading rapidly," Kaplan said. Kaplan has previously said he wants the Fed to start scaling back its asset purchases in October.

"so far, it (the Delta variant) has not had a substantial impact on consumer activities such as eating out," but "has had an impact on returning to the office, which affects the ability to hire workers for fear of infection" and may affect output, he said.

Kaplan added that a "huge economic variable" was the speed at which the US population was vaccinated against COVID-19, as well as wearing masks and other ways to prevent the virus.

Kaplan expects PCE inflation to be 3.8% and 3.9% by the end of 2021. Extreme inflation is likely to moderate, he said, with PCE inflation expected to be 2.5 per cent in 2022.