HOUR fed he set the price of his taming inflation as follows: several years of low growth and several million people out of work. If all this leads to higher prices, she should be ready to bear the costs, not least because if Jerome Powell is wrong, she will pass the problem on to the US President. Joe Biden.

The central bank raised interest rates on Wednesday by 75 basis points, while stressing that they could be even higher than investors expected. The Fed now estimates its key rate could rise to 4.6% in 2023, while investors have been betting that it could reach 4.4%, according to the Federal Reserve Bank of Atlanta. Unemployment can reach 4.4%, that is, 1.3 million people will be left without work.

For now, the Fed thinks it can handle this without a hard landing. While GDP growth could fall to 0.2% this quarter and 1.2% a year from now, rate-setters predict things will “return to normal” by the end of 2024. The Fed is either optimistic or trying to handle the bad news gently.

Unemployment brings frustration to millions of people, but rising prices affect more or less everyone. About half of small businesses now say inflation is their biggest concern, according to the US Chamber of Commerce, and the public shares the same sentiment, a Rew poll showed last May. In addition, there is little risk that the economic downturn will cause long-term damage. Banks are reporting that their customers still have higher savings than before the arrival of the coronavirus and that defaults are rising, but very slowly. JP Morgan Chief Executive Jamie Dimon said hours before the Fed announced its rate hike that the financial sector could weather a hard landing. For his part, Mr. Powell stressed on Wednesday that it is impossible to restart the economy painlessly. This is, of course, something that an independent bank can say without hesitation. But if the degree of pain is greater than he now expects, then he shifts the problem to Mr. Biden and Congress.