A year ago, Chair Jerome Powell warned that to fight high inflation, the Federal Reserve would continue to sharply raise interest rates, bringing “some pain” in the form of job losses and weaker economic growth.
. Auto loans and credit card rates have also shot higher and will likely weaken borrowing and consumer spending, the lifeblood of the eeconomy.
“We're not totally out of the woods yet, for banks or the economy," said Raghuram Rajan, an economist at the University of Chicago and former head of India’s central bank. Other threats also loom. Some analysts say they think the Fed's 11 rate hikes have yet to exert their full effect on the economy. “We should be somewhat worried that between exhausting their savings and the purchasing power of their money being eroded by inflation, many people are facing tighter budgets,” said Karen Dynan, a Harvard economist and former chief economist at the Treasury Department.
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