Fed Chairman

Jerome Powell

has said the central bank isn’t trying to cause a recession, but it can’t fail in its effort to bring down inflation. “I wish there was a painless way to do that. There isn’t,” he said last month.

Still, several analysts worry the Fed is on track to raise rates higher than required, potentially triggering a deeper-than-necessary downturn. 

“They’ve done a tremendous amount of tightening,” said

Greg Mankiw,

a Harvard University economist who advised President

George W. Bush.

“Recessions are painful for a lot of people. I think Powell’s right that some pain is probably inevitable…but you don’t want to cause more than is necessary.”

Until June, officials hadn’t lifted rates by 0.75 point, or 75 basis points, since 1994. Instead, they usually preferred making smaller quarter-point increases that gave them more time to see their economic effects.

“I would slowly ease the foot off the brake,” Mr. Mankiw said. “That means probably for a given meeting, if they’re debating 50 or 75, go with 50 instead of 75.” 

Former Fed Vice Chairman

Donald Kohn

agrees it is near time for Fed officials to slow their rate increases. “They need to downshift soon. They need to somehow downshift without backing off,” he said.

Fed officials left rates near zero last year as they focused on spurring a strong labor market recovery. The war in Ukraine this spring sent commodity prices higher and fueled concerns that inflation might become embedded into wage and price contracts.

“Moving in these 75-basis-point steps was effective when the Fed had a long way to go. It becomes more problematic when they need to calibrate policy more carefully, and I believe we’re approaching that point,” said Brian Sack, who ran the New York Fed’s markets desk from 2009 to 2012 and is now the director of economics at hedge-fund manager D.E. Shaw.

Some Fed critics say the current surge in inflation is the result of global disruptions rather than an overheated U.S. labor market, and they are pointing to signs that prices have begun to fall for a swath of goods and services, including commodities, freight shipping, and housing.

Housing costs have contributed notably to inflation in recent months amid large increases over the past year in residential rents. But housing demand is falling sharply as the 30-year mortgage rate nears 7%, a 16-year high—a direct result of the Fed’s rate increases. Home prices started to fall this summer in more U.S. markets, and economists at Goldman Sachs expect price drops of between 5% and 10% nationally by the end of next year. Apartment rent increases also have begun to slow.

Asset prices have also taken a beating, which tends to reduce spending and investment. A portfolio invested 60% in stocks and 40% in bonds is down nearly 20% this year.

“The housing market doesn’t look pretty, and that will eventually spread to the rest of the economy,” said Mr. Mankiw. Lower asset prices will, too, at some point, he said. 

Fed officials are cautious about expecting inflation to fall because it has consistently defied such forecasts over the past year. Some have pointed to risks of additional economic disruptions—for example, higher energy prices this winter if Russia suspends oil sales.

The strong U.S. labor market is fueling several officials’ concerns by making it easy for workers to switch jobs in pursuit of higher pay, putting upward pressures on wages. That could especially be the case if consumer spending keeps shifting away from goods toward more labor-intensive services.

Eric Rosengren,

who headed the Boston Fed from 2007 until last year, said he sees the Fed’s projected policy path as broadly appropriate. “If anything, I think the risks show they’re going to have to raise rates a bit more than they’re suggesting,” he said. “The U.S. economy, to date, looks more resilient than I might have expected given the rate increases that have already occurred.”

Traditionally, the Fed set policy based on forecasts of inflation, which lags behind changes in output. But officials now are reacting more to the latest inflation data “because they have absolutely zero confidence in their ability to forecast inflation,” said

Nathan Sheets,

chief global economist at Citigroup. He said he is concerned the Fed will overdo rate rises but concedes inflation in the service sector is “pretty concerning.”

One risk is that economic activity slows sharply but filters through to inflation measures with a longer-than-usual delay. Wholesale prices of used cars have been dropping in recent months, for example, but this hasn’t shown up broadly in price indexes yet. Housing prices and residential rents are calculated in a way that is particularly lagged.

Mr. Sheets said waiting for proof that inflation is declining before slowing rate rises means monetary policy could be “held hostage by something you know with high confidence is going to reverse in the coming months.”

New York Fed President

John Williams

said last week he expects falling commodity prices and easing bottlenecks to bring inflation to 3% by the end of next year, leaving it still too far above the Fed’s 2% goal.

Government policy makers focused heavily last year on avoiding the mistakes they thought were made after the 2008 downturn. Some said it would be easier to bring down inflation that overshot the Fed’s 2% target than to lift inflation from below that level.

Now, officials have signaled they are willing to err on the side of raising rates too much because they don’t want to repeat the mistakes of the early 1970s, when consumers and businesses began to anticipate high inflation, causing prices to keep rising. The Fed ultimately raised interest rates high enough to trigger a severe recession in the early 1980s to bring down prices and break that psychology.

“There is a record of failed attempts to get inflation under control, which only raises the ultimate costs to society of getting it under control,” Mr. Powell said last month.

Fed officials have spent considerable time studying the 1970s “and will avoid making those mistakes,” said

Diane Swonk,

chief economist at accounting firm KPMG. “But it opens the door to a whole host of new mistakes.”

Mr. Sack said he sees meaningful risks from both too much and too little tightening. “It’s not a completely one-sided story,” he said. “There are also risks from financial markets reacting in an abrupt way to higher rates, or from the slowdown in activity building on itself and becoming harder to control.”

Write to Nick Timiraos at Nick.Timiraos@wsj.com