Federal Reserve Chair Jerome Powell said Wednesday that inflation, which has been surging as the recovery strengthens, "will likely remain elevated in coming months" before "moderating."
At the same time, Powell signaled no imminent change in the Fed's ultra-low-interest rate policies.
Testifying to the House Financial Services Committee, Powell reiterated his long-held view that high inflation readings over the past several months have been driven largely by temporary factors, notably supply shortages and rising consumer demand as pandemic-related business restrictions are lifted.
During his testimony, House members peppered Powell with questions about the high inflation readings of the past several months, with some expressing concern that prices will continue to accelerate.
The chairman replied that the Fed would not respond to short-term price spikes by raising rates and risk weakening the economic recovery.
"By inflation, we mean year after year after year prices go up," Powell said. "If something is a one-time price increase... you wouldn’t react to something that is likely to go away. We really do believe that these things will come down of their own accord."
The Fed has said it will keep its benchmark short-term rate pegged near zero until it believes maximum employment has been reached and annual inflation moderately exceeds 2% for some time.
The central bank's policymakers have said they are prepared to accept inflation above its target to make up for years of inflation below 2%.
The Fed chair also said Wednesday that the economy is “still a ways off” from making the “substantial further progress” that the policymakers want to see before they will begin reducing their $120 billion in monthly bond purchases.
Those purchases are intended to keep long-term borrowing rates low to encourage borrowing and spending.
Additional reporting by The Associated Press.