Fed's Powell warns of 'pain' in inflation fight

STORY: "Reducing inflation is likely to require a sustained period of below-trend growth."

Federal Reserve Chair Jerome Powell, in hotly anticipated remarks on Friday, warned of slower economic growth and pain ahead for American households, saying the U.S. economy will need more constrictive monetary policy "for some time" before inflation comes under control.

"While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

The prepared remarks at the annual Jackson Hole central banking conference in Wyoming pushed U.S. stocks sharply lower as the speech suggested the central bank will keep raising interest rates to tame inflation, which is currently more than three times the Fed’s 2% target.

Fed policymakers have said they need to curb demand for goods and services by raising borrowing costs and making it more costly to finance homes, cars and business investments. As the process begins to sting, particularly in the housing market, companies may adjust their hiring plans or even resort to layoffs.

Powell also said people should not expect the Fed to dial back quickly until the inflation problem is fixed and some policymakers have indicated that even a recession would not dissuade them from fixing it.

"We must keep at it until the job is done."

Powell did not hint at what the Fed might do at its upcoming September meeting but officials are expected to approve either a 50-basis-point or 75-basis-point rate increase.