Federal Reserve Chairman Jerome “Jay” Powell stood at a podium at the Fed’s headquarters in Washington, D.C., sending a stern message to the global investment community: The central bank was going to tighten the money supply, even if it hurt.
The Fed had been maintaining rock-bottom interest rates and pumping trillions of dollars into the banking system through an extraordinary program called “quantitative easing.” But now it was time to withdraw that stimulus, to keep the economy growing and inflation low. The process, Powell proclaimed, was on “automatic pilot”: It would not be slowed or hindered, even if stock prices plunged or the bond market panicked. The Fed was created to do hard things like this, insulated from political pressure, and Powell was determined to do them. Taking a more hawkish stance “has been a good decision,” Powell said. “And I don’t see us changing that.”
