At an annual conference of central bankers in Jackson Hole, Wyoming, Federal Reserve Chairman Jerome Powell spoke on Friday, signaling the monetary body may not be done hiking its benchmark lending rate as wide swaths of the economy are still running too hot, even after an unprecedented streak of policy tightening going back to March 2022.

Powell said the message he had to share on Friday was essentially unchanged from comments he made at the same gathering last year, just a few months after U.S. inflation had hit a peak of 9.1%.

“We have tightened policy significantly over the past year,” Powell said. “Although inflation has moved down from its peak, a welcome development, it remains too high.

“We’re prepared to raise rates further if appropriate and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.”

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Even after an early July report found U.S. inflation in June had dropped to 3%, the lowest annual rate in over two years, the Federal Reserve announced a .25% hike to its benchmark lending later in the month, its 11th rate increase since March 2022.

Following a decision at its June meeting to take a pause on a streak of rate hikes, the Fed’s Open Markets Committee voted unanimously to support the increase which brought the monetary body’s intra-bank overnight lending rate into the range of 5.25% to 5.5%, the highest it’s been since 2001.

Interest rate adjustments are the Fed’s primary weapon in an ongoing battle against the elevated prices of consumer goods and services and represents the monetary body’s most aggressive series of increases in decades.

The rate hikes aim to raise the cost of debt for businesses and consumers, which should, theoretically, reduce the amount of spending and overall economic activity, a shift in dynamics that typically brings inflation rates down.

On Friday, Powell noted that some areas of the economy have remained resilient to the Fed’s strategy including wage growth, consumer spending and an ongoing imbalance in the U.S. jobs sector in which unfilled positions still far outnumber workers available to fill them.

Although so-called headline inflation was at 3.2% in July, up slightly from June but well down from a 40-year-high of 9.1% in June 2022, core inflation, a measure that strips out volatile food and energy prices, was at 4.7% in July, a figure well above the Fed’s target rate of 2%.

Powell revisited the forces that propelled the current inflation cycle, noting high inflation emerged from a “collision between very strong demand and pandemic-restrained supply” and the formula for stemming rising prices would require an unwinding of “unprecedented pandemic-related supply and demand distortions” and a tightening of monetary policy aiming to “slow the aggregate demand.” And while both those dynamics have been playing out, and U.S. inflation has been on a steady decline, Powell said the end of the effort was not yet in sight.

“While these two forces are now working together to bring down inflation, the process still has a long way to go.”

Powell also discussed the challenge of knowing exactly when to declare victory when it comes to the body’s fight against inflation thanks to an unpredictable lag between changes in monetary policy and noticeable impacts on the economy.

He also acknowledged, as he has in the past, that the Fed’s interest rate adjustment tool is imprecise at best.

“Doing too little could allow above-target inflation to become entrenched,” Powell said. “Doing too much could also do unnecessary harm to the economy.

“We’re navigating by the stars under cloudy skies.”