Federal Reserve Chair Jerome Powell took a step toward assuming the mantle of inflation slayer Paul Volcker, all but acknowledging that reining in run-away price pressures may result in a recession.

Declaring that it's essential to bring inflation down, Powell engineered the central bank's biggest interest-rate increase since 1994 on Wednesday and held out the distinct possibility of another jumbo three-quarter percentage point increase in July. For the first time, Powell openly endorsed raising rates well into restrictive territory with the aim of cooling off the labor market and pushing joblessness up—a strategy that in the past has often resulted in an economic downturn.

"This is a Volcker-esque Fed," said Diane Swonk, chief economist at Grant Thornton LLP. "That means the Fed is willing to take a rise in unemployment and a recession to avert a repeat of mistakes of the 1970s. Supply shocks won't correct themselves, so the Fed must reduce demand to meet a supply-constrained world."