His comments brought down the curtain on a rally across equities sparked last week when officials hinted that their long-running tightening cycle may be at an end.
They came as other key decision-makers have lined up to suggest that while recent data has suggested the hikes are kicking in, traders should be aware that more measures could be needed if prices remain elevated.
Powell told an International Monetary Fund conference Thursday that "progress toward our two percent goal is not assured".
"If it becomes appropriate to tighten policy further, we will not hesitate to do so," he said.
While policymakers were "committed" to achieving a sufficiently tight monetary policy stance, "we are not confident that we have achieved such a stance", he added.
He added that officials were aware of the need not to overtighten, which many fear could tip the world's top economy into recession.
The Fed decision last week to hold rates came as they acknowledged soaring Treasuries -- 10-year yields hit a 16-year high recently -- were acting as a substitute for rate hikes.
Hopes for an end to the rate-hiking fuelled a rally in Treasuries -- yields fall as prices rise -- and Saxo's Redmond Wong said Powell's comments were "an attempt to push back on the dovish repricing".
Stephen Innes at SPI Asset Management said Powell "basically dumped ice water on the thought of peak Fed" after Treasury yields rallied Thursday.
Other members of the policy board have hinted that more tightening could come, with governor Michelle Bowman saying some sectors continued to see strong inflation, while others wanted to see more data before making a decision.
However, Richmond Fed chief Thomas Barkin said the full effects of more than a year of hikes had still not been felt. And his Atlanta counterpart Raphael Bostic thought "our policy is restrictive, and likely sufficiently restrictive, but I think we're going to still have bumps along the way".
All three main indexes on Wall Street ended in the red, with the S&P 500 falling after eight straight gains.
And Asia followed suit, with Hong Kong off more than one percent, while Tokyo, Shanghai, Sydney, Seoul, Singapore, Bangkok, Taipei, Jakarta, Wellington and Manila were also well down.
London opened lower as data showed the UK economy stalled in the third quarter, with Paris and Frankfurt also in the red.
Still, JPMorgan Chase & Co. chief US economist Michael Feroli remained optimistic the hikes had come to an end.
"We still believe the Fed is done hiking for this cycle, but today's speech should serve as notice that their rhetoric must stay hawkish until they've seen further improvement in inflation," he said in a note.
The dollar rallied against its key peers after the remarks, and it held those gains in Asia on Friday.
Traders were keeping a particular eye on the greenback's gains against the yen after it pushed back above the 151 level, with Japanese authorities saying they are ready to step in to support their unit if it weakens too far.
- Key figures around 0810 GMT -
Tokyo - Nikkei 225: DOWN 0.2 percent at 32,568.11 (close)
Hong Kong - Hang Seng Index: DOWN 1.8 percent at 17,203.26 (close)
Shanghai - Composite: DOWN 0.5 percent at 3,038.97 (close)
London - FTSE 100: DOWN 0.6 percent at 7,413.91
Dollar/yen: UP at 151.39 yen from 151.35 yen on Thursday
Euro/dollar: DOWN at $1.0666 from $1.0671
Pound/dollar: UP at $1.2227 from $1.2223
Euro/pound: DOWN at 87.24 pence from 87.28 pence
West Texas Intermediate: UP 0.3 percent at $75.99 per barrel
Brent North Sea crude: UP 0.4 percent at $80.33 per barrel
New York - Dow: DOWN 0.7 percent at 33,891.94 (close)
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