Federal Reserve Chair Jerome Powell said on Friday inflation is still too high, and he warned that restoring price stability will likely require an extended period of elevated interest rates.

Speaking to a gathering of economists and central bankers in Jackson Hole, Wyo., Powell said it's encouraging that inflation has cooled — from 9.1% last summer to 3.2% last month.

But Powell stressed some of the improvement could be temporary, and he reiterated the Fed is committed to getting inflation all the way down to their 2% target.

"The process still has a long way to go," Powell said. "We are prepared to raise [interest] 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."

The central bank has already raised its benchmark interest rate from near zero in early 2022 to just over 5.25% today — in the most aggressive series of rate hikes since the early 1980s.

Going into the Jackson Hole gathering, investors have been betting the Fed will leave rates unchanged at its next meeting in September. But Powell gave no assurances, saying he and his colleagues will be guided by incoming economic information.

"We are navigating by the stars under cloudy skies," Powell said. "We will proceed carefully as we decide whether to tighten further or, instead, to hold the policy rate constant and await further data."

A delicate balancing act

Anyone anticipating a rapid cut in interest rates would have been disappointed by Powell's remarks. He pointed to higher-than-expected GDP growth and robust consumer spending as signs that further rate hikes may be needed.

Rising interest rates have been a significant drag on the housing market. Mortgage rates have climbed to their highest level in more than two decades, and sales of existing homes have dropped sharply (although sales of newly-built homes, however, are on the rise).

Powell said he and his colleagues have a delicate balancing act, as they decide how high interest rates need to go to bring prices under control.

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

A survey of business economists released earlier this week showed nearly three-quarters believe the Fed's interest-rate policy is "about right." Nearly 70% of forecasters surveyed say they're at least "somewhat confident" the Fed can achieve a "soft landing," curbing inflation without tipping the economy into a recession.