With financial markets already selling-off on fears over the Omicron coronavirus variant, it might have seemed like an odd moment for the chair of the Federal Reserve to make his most hawkish comments on monetary policy since the start of the pandemic.
But on Tuesday, Jay Powell effectively jettisoned the Fed’s previous stance on soaring inflation and signalled his support for a faster reduction of the central bank’s massive bond-buying programme, giving policymakers leeway to raise interest rates more quickly than expected.
In doing so, Powell sent a clear message to markets: combating inflation, which hit a 30-year high last month, is now the top priority for a central bank that has spent almost two years focused squarely on boosting demand and employment.