NEW YORK U.S. Federal Reserve officials "are not confident" that interest rates are yet high enough to finish the battle with inflation, and may be nearing the end of how much help they can expect in lowering price pressures from improvements in the supply of goods, services and labor, Fed Chair Jerome Powell said on Thursday.

In comments prepared for delivery to an International Monetary Fund research conference, Powell said the Fed "is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; We are not confident that we have achieved such a stance."

MARKET REACTION:

STOCKS: The S&P 500 deepened a loss and was last down 0.69%BONDS: The U.S. Treasury 10-year yield moved higher and was last at 4.638%.

FOREX: The dollar index extended a gain and was last up 0.41%.

COMMENTS: VASSILI SEREBRIAKOV, FX STRATEGIST, UBS, NEW YORK

“I don’t think Powell said anything significantly new but I think the markets took his comments as somewhat hawkish, but I also think the rates market was still somewhat jittery after the auction so higher yields was the path of least resistance.”

ANGELO MANOLATOS, MACRO STRATEGIST, WELLS FARGO SECURITIES, NEW YORK

"The Fed is in this last mile. They're still contending with above-target inflation and they have the benefit of growth running above potential. With that backdrop, it affords Powell to deliver more hawkish commentary that the Fed still has a hiking bias. The path to 2% is going to be bumpy and the Fed is not convinced that it has done enough. But at this point, his comments today did not change our view that Fed is essentially done raising rates and cutting sometime in the middle of next year."

QUINCY KROSBY, CHIEF GLOBAL STRATEGIST, LPL FINANCIAL, CHARLOTTE, NC (email)

"Equity markets are edging lower as Jerome Powell implies that another rate hike may be necessary if inflation doesn't pull back at a faster pace.

"With 33 days left until the next Fed meeting there will be an important spate of inflation-related data for the FOMC to assess the need for another rate hike.

"Markets are also responding to a 30-year Treasury auction this afternoon in which the yield settled at a higher rate than anticipated.

"Markets have had a strong move but have edged closer to overbought levels. Powell's comments coupled with a disappointing auction is a logical excuse for the market to begin consolidating gains."

PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“(Powell is) taking a hawkish viewpoint again. The Fed is gratified by low inflation, but we still have a long way to go.

“He’s reassuring the market that the fight against inflation has not been won and if economic conditions warrant, they won’t hesitate to hike rates again.”

“If you add up all the remarks, Powell is telling the market not to get too complacent and that’s putting some pressure on stocks.”

“But he said that they would move carefully in order to avoid over-tightening.”

(Compiled by the Global Finance & Markets Breaking News team)