Financial conditions are rapidly tightening

Fed Chair Powell: Controlling inflation will ‘include some pain’ – Marketplace

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After steering the U.S. central bank through anĀ unprecedented series of challengesĀ from the pandemic, Federal Reserve Chair Jerome Powell and the Federal Open Market Committee face another critical test: controlling theĀ highest inflation in decadesĀ without tipping the economy into a recession.

Last week, the FedĀ announced the biggest interest hikeĀ in 22 years and plans for reducing the Fedā€™s nearly $9 trillion balance sheet.

ā€œWhat we can control is demand, we canā€™t really affect supply with our policies,ā€ Powell told Marketplace host Kai Ryssdal in an interview Thursday. ā€œAnd supply is a big part of the story here. But more than that, there are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so. So the question whether we can execute a soft landing or not, it may actually depend on factors that we donā€™t control.ā€

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