U.S. Stock prices have fallen for three straight days since Federal Reserve Chairman Jerome Powell said the central bank must keep raising interest rates for a while to control the fastest rise in inflation in 40 years, even if doing so dampens growth and causes unemployment.

Failure to curb inflation now raises the risk of price increases becoming a more permanent part of the economy, causing even more pain down the road, Powell said Friday at the Federal Reserve Bank of Kansas City’s annual conference near Jackson, Wyo.

“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,” Powell said. “These are the unfortunate costs of reducing inflation.”

That pain could take the form of job losses.

“What [Powell] calls ‘some pain,’ means putting people out of work, shutting down small businesses because the cost of money goes up, because the interest rates go up,” said Democratic Sen. Elizabeth Warren of Massachusetts during an interview.

U.S. Stock prices plummeted after Powell’s more-hawkish-than-expected speech on Friday and have been falling for three straight days. The S&P 500 lost about 5 percent over the last three sessions. Investors in bonds began to bet that the central bank will raise rates by more than they had expected, New York Times reported.

The Dow Jones Industrial Average finished lower for a third straight day on Tuesday as strong labor-market data gave the Federal Reserve even more ammunition to continue its aggressive pace of interest-rate hikes. The tech-heavy Nasdaq Composite saw three straight daily drops of at least 1 percent.

“The process won’t be painless, and I think he’s being more upfront about that,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research. “The likelihood of recession is rising, because that’s the solution to the inflation problem — that’s what they’re telling you.”

The Fed raised the target range for its Fed funds rate from near zero in March to a range of 2.25 to 2.5 percent at its July 2022 meeting. The Fed funds rate reached an all-time high of 20 percent in March, 1980.

Higher interest rates make it more expensive to borrow money to build homes or expand businesses, slowing economic activity and cooling down the job market. This can help reduce demand enough to allow supply to catch up and price increases to slow down.

Strong labor-market data gave the Federal Reserve more ammunition to continue its aggressive pace of interest-rate hikes, Marketwatch reported.

Job openings jumped in July with the layoff rate near record lows and employer demand for workers historically strong. There are almost two job openings for every unemployed worker, giving workers negotiating power, according to economists. That power may dissipate as the Fed raises rates to try to ease inflation.

Each 1 percentage point increase in the unemployment rate translates to a loss of around 1.6 million jobs, said Mark Zandi, chief economist at Moody’s Analytics. If the U.S. goes into a recession with joblessness around 6 percent, that would amount to about 5 million jobs, he said.

Before the Great Recession, the unemployment rate was about 5 percent. It went up to 10 percent as economic conditions deteriorated.

The hot job market for workers will likely not last.

“As the fall approaches, I think we’ll see a slightly different story,” said Elizabeth Crofoot, a senior economist at Lightcast, which tracks labor market data.

The next announcement of an interest rate increase could come at the Fed’s Sept. 20-21 meeting, after it decides whether to make a third straight “unusually” large three-quarter-point rate increase, NYT reported.

Photo: Job applicants fill out employment applications during the Lee County Area Job Fair in Tupelo, Miss., Oct. 12, 2021. (AP Photo/Rogelio V. Solis)