Fed's Powell says first interest rate hike likely at March meeting
The US central bank will likely go ahead and begin to tighten policy when it next meets, despite the "high uncertainty" around the war in Ukraine.
In prepared remarks posted to the Federal Reserve's website, chairman Jerome Powell said: "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.
"Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook."
He also said that policy would be tightened through a mix of interest rate hikes and balance sheet reductions.
Nonetheless, the latter would begin after the process of hiking rates had begun and "proceed in a predictable manner primarily throuigh adjustments to reinvestments."
Powell emphasised how inflation hurt lower income groups of the population hardest, adding that the best way to promote a strong jobs market was by promoting an environment of stable inflation which in turn would allow for a long expansion.
The central bank chief nevertheless added that inflation was expected to decline over the course of 2022, as supply chain problems eased, the boost from fiscal support waned and monetary policy was tightened.
Federal Reserve policymakers were next due to meet on 15-16 March.