Nevertheless, I acknowledge that there is significant uncertainty around the amount of tightening of credit conditions in the coming year in response to the bank stress and the magnitude of the effect that tightening might have on the U.S. economy. Therefore, there is some downside risk that the incremental effect of the credit shock is larger than I expect.
Monetary Policymaking and Current Uncertainties The pandemic aftermath, geopolitical instability, and banking-sector stress have contributed to a highly uncertain economic environment. Additionally, the numerous post-pandemic "surprises" in inflation, employment, and economic growth suggest that the underlying structure of the U.S. economy may be in flux. More simply, the datagenerating process for the post-pandemic U.S. macroeconomy is less clear.