Economy

He expects companies to take immediate action to improve capacity as soaring gas prices fuel record inflation.

Following in the footsteps of inflation-slayer Volcker, Powell openly endorses raising rates into restrictive territory with the aim of cooling off the labor market.

The producer price index for final demand increased 0.8% from April, and 10.8% from a year earlier, Labor Department data showed.

Price pressures are becoming entrenched in the economy, which will likely push the Federal Reserve to raise interest rates even more aggressively.

"I've never seen inventory surges like this in my career, and I've been around for a long time," said Cathie Wood, the head of Ark Investment Management.

As imports fell amid China's Covid lockdowns and U.S. exports grew, the U.S. trade deficit shrunk by 19.1% in April.

She points to slowing growth in the core inflation rate as indicating that price hikes are moderating. Still, in this geopolitical climate, "we can't rule out further shocks."

"When interest rates are at or close to zero, it's very easy to get credit and the difference between a good company and a bad company is narrow. When the tide runs out, you figure out who is swimming naked."