U.S. Federal Reserve Chair Jerome Powell signaled on Wednesday that inflation is now enemy No. 1 to keeping the economic expansion on track and returning the labor market to something approaching ebullient pre-pandemic levels.
In an abrupt policy pivot, the Fed sped up the drawdown of its asset-purchase program and laid out a road map for a series of interest-rate increases over coming years, which started with three hikes in 2022. Powell also raised the possibility that the U.S. central bank might begin to withdraw liquidity from the financial system before too long by reducing its massive balance sheet.
"One of the two big threats to getting back to maximum employment is actually high inflation,” Powell said during a press briefing, adding that the pandemic was the other. "What we need is another long expansion, like the ones we have been having over the last 40 years.”