An index of global stock markets fell, while short-term U.S. Treasury yields rose on Friday, after Federal Reserve Chair Jerome Powell said the U.S. economy will need tight monetary policy “for some time” before inflation is under control.

The dollar erased early losses to turn positive against a basket of currencies, while gold, which loses appeal as interest rates rise, fell after Powell’s comments.

Tight monetary policy “for some time” means slower growth, a weaker job market and “some pain” for households and businesses, Powell said in a speech to the central banking conference in Jackson Hole, Wyoming.

“Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions,” Powell said.

He did not hint at what the Fed might do at its upcoming Sept. 20-21 policy meeting. Officials are expected to approve either a 50- or 75-basis-point rate increase.

Interest rate futures tied to expectations about Fed policy fell on Friday moments after Powell’s speech, reflecting increased chances of a third straight 75-basis-point rate hike.

“It was hawkish as expected. Powell’s message is clear: the Fed is far from done in its fight against inflation,” said Antoine Bouvet, senior rates strategist at ING in London.

MSCI’s gauge of stocks across the globe shed 2.47%, its worst day in more than two months.

Wall Street’s main indexes fell, with Powell’s comments dragging down megacap growth and technology stocks.

“His comments were hawkish. He’s keeping the pedal to the metal here when it comes to policy to fight inflation,” said Lindsey Bell, chief money and markets strategist at Ally.

The Dow Jones Industrial Average fell 1,008.38 points, or 3.03%, to close at 32,283.4, the S&P 500 lost 141.46 points, or 3.37%, to finish at 4,057.66 and the Nasdaq Composite dropped 497.56 points, or 3.94%, to end the session at 12,141.71.

European stocks slid as investors also fretted over downbeat German consumer sentiment data due to rising energy costs.

Consumer morale in the euro zone’s two biggest economies diverged starkly in August as French consumers benefited from fresh government measures while concerns over rising energy bills hit their German counterparts, surveys showed on Friday.

The pan-European STOXX 600 index lost 1.68%.

U.S. two-year Treasury yields briefly reached their highest levels since October 2007 before stabilizing near two-month highs after Powell’s comments.

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, rose on Powell’s comments and was last up 1 basis point at 3.3824%.

The yield on 10-year Treasury notes was up about 1 bps to 3.0334%.

The rise in short-term rates extended the yield curve’s inversion, which is widely seen as signaling an upcoming recession. The closely watched gap between yields on two- and 10-year Treasury notes was at -35 basis points, compared to -31.3 basis points before Powell’s speech.

In currency markets, the dollar erased early losses against a basket of currencies following Powell’s remarks to trade up 0.30% at 108.8.

The euro, which had edged higher following a Reuters report that some European Central Bank policymakers want to discuss a 75-basis-point interest rate hike at their September policy meeting, gave up those gains to trade down 0.07% at $0.9965.

Oil prices ended higher on Friday, boosted by signals from Saudi Arabia that OPEC could cut output, but trading was volatile as investors digested and ultimately shrugged off the Fed’s warning on economic pain ahead.

Brent crude LCOc1 futures rose $1.65 to settle at $100.99 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 54 cents to settle at $93.06 a barrel.

Spot gold was at $1,736.813 per ounce, down 1.23%.