ead the recent article from the Financial Times below and answer the following questions according to the text of the article. 1) Why bringing inflation down to the US central bank's target could be painful according to Jay Powell? 2) Is the US central bank (CB) about to conduct expansionary or contractionary monetary policy? 3) What are the main challenges for the CB when tackling inflation? 4) What is the main danger with regard to current high inflation in the US? 5) By how many percentage points is CB going to raise rates this summer?
Jay Powell warns that taming US inflation will cause 'some pain' Federal Reserve chair Jay Powell has warned bringing inflation down to the US central bank's target of 2 per cent will cause "some pain", adding that tackling high prices without causing a recession may depend on factors outside of its control. The remarks from Powell, which constitute some of his most bearish comments to date, come amid significant uncertainty about the economic outlook as the Fed begins what is likely to be the fastest tightening of monetary policy in years. The central bank has raised rates by 0.75 percentage points from the near-zero levels that had been in place since the early days of the coronavirus pandemic, having implemented a half-point rate rise just last week. The moves are part of its plans to "expeditiously" shift policy to a neutral setting that no longer stimulates demand. The central bank will also begin shrinking its $9tn balance sheet next month. In an interview with Marketplace on Thursday, Powell reiterated the Fed's commitment to bringing down inflation and underscored the challenge of doing so without triggering job losses and a possible recession. "The process of getting inflation down to 2 per cent will also include some pain, but ultimately the most painful thing would be if we were to fail to deal with it and inflation were to get entrenched in the economy at high levels," he said. "The question whether we can execute a soft landing or not, it may actually depend on factors that we don't control," Powell added. "But we there's a job to do on demand." The Fed is expected to should control the controllable. introduce at least two more half-point rate rises in June and July, and to maintain that pace at its meeting in September. After that point, it is expected to moderate back to quarter-point increases. By the end of the year, traders estimate the benchmark policy rate will rise to about 2.7 per cent