Stocks slumped on Friday after Federal Reserve (Fed) Chair Jerome Powell pledged to act "forcefully" against soaring inflation in a battle that will be painful for American families and businesses.

The Fed has been on an aggressive campaign to raise interest rates and Powell made it clear at the Jackson Hole gathering of global monetary policymakers that the fight against inflation is not over.

Powell clarified that Fed policy and the benchmark borrowing rate would have to remain "sufficiently restrictive" to return inflation to its 2 percent target.

U.S. inflation eased slightly in July at 8.5 percent, but remained close to a four-decade high.

Wall Street ended Friday with all three benchmarks more than 3 percent lower. The S&P 500 lost 3.37 percent, while the Nasdaq Composite slid 3.94 percent. The Dow Jones Industrial Average fell 3.03 percent.

"The pushback is coming from the idea that it's not about the pace of hikes going forward and how they tighten financial conditions, it's about the duration of remaining at that restrictive policy stance," said Garrett Melson, portfolio strategist at Natixis Investment Managers.

Among investors, there remains uncertainty as to whether the Fed will hike rates next month by 75 or 50 basis points.

(With input from Reuters, AFP)