Can Fed do that without destabilising financial markets?

Will policymakers dare to withdraw stimulus and raise interest rates if there is a risk of a blow-up in asset prices?

In 2013, then Fed chair Ben Bernanke sparked what became known as a “taper tantrum”

On a smaller scale, in late 2018, current chair Jay Powell suggested that the Fed was on “automatic pilot” towards regular rate rises, triggering tremors across global stocks. Within six weeks, he had changed his tune

Investors took this as, at least in part, a capitulation to market pressures.

The same tension is present now. 

Katie Martin FT's markets editor 19 January 2022

https://www.ft.com/content/6ecf9753-ffc4-4f2e-bbc4-cda4754ff41e