When inflation is high and the economy is in overdrive, the Fed tries to pump the brakes by discouraging borrowing. It does this by setting higher interest rates and decreasing the money supply. Since March 2022, the Fed raised the federal funds rate 11 times, which helped slow down record-high price growth.

After cutting interest rates by a quarter point, Fed Chair Jerome Powell said he understands consumers are still experiencing high prices, and that he would not resign if asked by President-elect Donald Trump.