billionaire hedgefund manager paul tudor jones expects it to be an interesting tightening cycle as the federal reserve and chairman jerome powell play catchup after inflation surged well above the central bank’s 2 target where it’s expected to remain for some time jones in an interview with cnbc said that on a relative basis he doesn’t know whether those assets will “go down or up” but that they’re “clearly going to be challenged” if the fedfunds rate rises to 2 over the next two years ” jones who won fame for predicting the stockmarket crash in october 1987 has been a sharp critic of powell and the fed previously complaining that policy makers were “inflation creators not inflation fighters” now that the fed has pivoted to tightening monetary policy powell and his fellow policy makers are going to scramble to catch up jones said tuesday the last time the unemployment rate stood at 39 fed funds were at 175 and on the to a peak of 25 jones said while the 10year treasury yield was at 3 the fedfunds rate now stands in a range of 0 to 025 while the 10year yield recently tested the 180 threshold powell is “going to play catchup and he’s got a lot of catching up to do and i think that’s why you’re seeing them talk about quantitative tightening because i don’t think he can catch up fast enough to try to deal with the inflation problem that he has right now” jones said quantitative tightening refers to the fed shrinking its balance sheet which has expanded sharply since the pandemic took hold as a result of the central bank’s quantitative easing measures the fed is winding down its monthly asset purchases as it brings the latest episode of quantitative easing to a close minutes of the fed’s december policy meeting showed that officials had discussed moving quickly to begin winding down the balance sheet once qe is brought to a halt a topic that’s also been raised by fed officials in public remarks stocks have wobbled in the new year as investors have penciled in for a more aggressive fed but equities appeared to find their footing tuesday the dow jones industrial average djia was up around 115 points or 03 while the sp 500 spx rose 07 and the nasdaq composite comp jumped 13 powell who has been nominated by president joe biden to serve a second term as fed chief told the senate banking committee tuesday that the central bank’s plans to raise interest rates should not throw a wrench in the economy or damage the job market powell was testifying at his confirmation hearing he’s expected to win approval from the full senate