The U.S economy muddled through a spate of high inflation, with employment staying strong last year despite inflation rising to a 40-year high. Now, markets are signaling that the muddle is ending and something worse is replacing it.

The Federal Reserve, the markets’ BFF during much of the last decade, is now more like a frenemy. On Sept. 21, the Fed raised interest rates by three-quarters of a percentage point, as expected. It also signaled more aggressive rates hikes ahead.

This is the tough-love Fed that may have to cause some economic harm, in order to prevent worse harm that would come from runaway inflation.

“The chances of a soft landing are likely to diminish to the extent that policy needs to be more restrictive or restrictive for longer,” Chair of the Federal Reserve Jerome Powell said on Sept. 21.

Here’s what he means: With inflation still uncomfortably high, the Fed will have to keep cranking interest rates upward. That is raising the odds of a recession, including the likelihood that more people will lose their jobs and suffer the ravages of unemployment.

It hasn’t happened yet.

Inflation peaked at 9% in June and dipped to 8.2%. The unemployment rate, at 3.7%, remains near a cyclical low.

But inflation isn’t coming down fast enough for the Fed, which has boosted short-term rates from around 0 to about 3%. Longer-term rates on consumer and business loans rose by similar margins. As rates rise and borrowing gets more expensive, spending and hiring typically slow. Softer demand eases the pressure on prices, bringing inflation down.

A soft landing would be a consistent drop in inflation that doesn’t disrupt the labor market or squeeze economic growth too much. The stock market rallied from July to August because falling oil and gasoline prices and some other factors suggested inflation would abate without drastic action by the Fed. Investors bet on a soft landing.

But August inflation came in surprisingly hot, pushing the Fed into shock-and-awe mode. “Fed on a warpath,” Bank of American warned clients on Sept. 23. “Overshoot and hard landing likely. Central banks will hike till something breaks.”