U.S. economy will need tight monetary policy 'for some time' -Fed Chair

STORY: "Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. 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," Powell said in a speech that kicked off the Jackson Hole conference.

"These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain."

As that pain gets greater, Powell said, people should not expect the Fed to dial back quickly until the inflation problem is fixed. Some investors anticipate the Fed will flinch if unemployment rises too fast, with some even penciling in interest rate cuts next year, an outlook U.S. central bank officials have leaned hard against in recent weeks.

Powell did not hint at what the Fed might do at its upcoming Sept. 20-21 policy meeting. Officials are expected to approve either a 50-basis-point or 75-basis-point rate increase.