Federal Reserve Chair Jerome Powell told lawmakers Wednesday that the central bank is poised to lift interest rates from near zero at its meeting later this month as it embarks on an effort to cool down high inflation — even as conflict in Ukraine ramps up uncertainty.

“We expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month,” Powell said during testimony before the House Financial Services Committee.

Powell told lawmakers that he supports a quarter-point increase at that meeting.

More about Russia’s war on Ukraine

He noted that the Fed will move toward a “predictable” shrinking of its big bond holdings after raising rates, a move that will take additional steam out of the economy, and that it will discuss those plans at its meeting ending March 16 without finalizing them.

But Powell noted that the economic path ahead remains unsettled given Russia’s invasion of Ukraine, adding that “we are going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment.”

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While Fed officials are prepared to use their policies to make money steadily more expensive in a bid to slow consumer and business demand, hoping to cool off rapid price gains, Powell added that the central bank must be flexible as Russia’s invasion of Ukraine looms large.

“The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions and of events to come, remain highly uncertain,” he said. “We will need to be nimble in responding to incoming data and the evolving outlook.”

The Fed chair noted that, before geopolitical events ratcheted up, he had seen a policy path this year in which every Fed meeting was a possibility for rate increases and the central bank would make progress toward shrinking its balance sheet.

“The question now really is, how the invasion of Ukraine, the ongoing war, the response from nations around the world — including sanctions — may have changed that expectation,” Powell said. “It’s too soon to say for sure, but for now, I would say that we will proceed carefully along the lines of that plan.”

Powell painted the geopolitical upheaval as something creating a sense of wariness but noted that it is hard to gauge what the economic effect will be. Economists have said that the conflict is likely to push gas prices higher, further elevating inflation, but that a combination of higher fuel costs and wavering consumer sentiment could drag on economic growth.

The Fed chair is technically serving on a pro tempore basis as he awaits Senate confirmation to a second term — a vote that has been delayed as Republicans boycott one of President Joe Biden’s other nominees to the Fed. Powell is testified before the House on Wednesday and will be in the Senate on Thursday at a tense political and economic moment, as a war rages overseas and inflation dominates headlines and spooks consumers at home.

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Powell also addressed a positive aspect of the economy: Growth has been strong, and jobs are abnormally plentiful.

“The labor market is extremely tight,” Powell said. He added that “employers are having difficulties filling job openings, an unprecedented number of workers are quitting to take new jobs and wages are rising at their fastest pace in many years.”

Some of that progress has been obscured by high inflation. Biden in his State of the Union address Tuesday night called fighting high prices his “top priority,” in a sign of how central it has become to the national discussion.

Prices are increasing at the fastest pace in 40 years, picking up 7.5% over the year ended in January in the closely watched consumer price index and 6.1% when measured by the Fed’s preferred inflation gauge, the personal consumption expenditures index. The central bank aims for 2% inflation on average over time.

“What we’re facing now” is “an elevated level of demand in the face of supply-side constraints — and it’s the collision of those two things that’s creating inflation,” Powell said.

Powell said the Fed expects inflation to cool off this year as government pandemic relief spending fades, interest rates increase and supply constraints clear up, but it is closely monitoring factors that could keep it high. If that does not happen, he said that the central bank would be prepared to make a larger-than usual rate increase — perhaps half a percentage point — in response.

“We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched while promoting a sustainable expansion and a strong labor market,” Powell said.