Fed's Powell pledges to combat inflation 'forcefully,' but warns of economic pain ahead

Federal Reserve Chairman Jerome Powell on Friday delivered a stark message on the state of the U.S. economy at the annual central bank gathering in Wyoming: Inflation remains painfully high, and cooling it will require forceful action that could soon bring "pain" to households and businesses nationwide. 

In his hotly anticipated speech at the Kansas Federal Reserve's Jackson Hole symposium, Powell reiterated a pledge to "forcefully" fight inflation that is still running near the hottest pace in 40 years and wrestle it closer to the Fed's 2% goal. 

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

Even with four consecutive interest rate hikes, including two back-to-back 75 basis point increases, Powell stressed that the Fed is not in a place to "stop or pause" – an unwelcome sign for investors who were predicting a rate cut next year.