Coming off historically low interest rates, the Fed has taken very aggressive action to tame inflation this year, raising the federal funds target rate by 425 basis points since March. As the following chart shows, this tightening cycle is unprecedented in its pace. Between 2004 and 2006, the Fed also raised rates by a total of 425 basis points, but did so over the course of two years rather than nine months.
“Over the course of the year, we have taken forceful actions to tighten the stance of monetary policy. We have covered a lot of ground, and the full effects of our rapid tightening so far are yet to be felt. Even so, we have more work to do,” Powell said in a press conference on Wednesday. "Without price stability, the economy doesn’t work for anyone. My colleagues and I are acutely aware that high inflation imposes significant hardship as it erodes purchasing power, especially for those least able to meet the higher costs of essentials like food, housing, and transportation," Powell explained the Fed's forceful approach.