Fed Chair Powell notes 'highly uncertain' Ukraine impact, but says rate hikes are still coming

cnbc.com:

Federal Reserve Chairman Jerome Powell still sees interest rate hikes coming, but noted Wednesday that the Russia-Ukraine war has injected uncertainty into the outlook.

In remarks prepared for dual appearances this week before House and Senate committees in Congress, the central bank chief acknowledged the «tremendous hardship» the Russian invasion of Ukraine is causing.

«The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely,» 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,» he added. «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.»

The remarks come amid 40-year highs for inflation in the U.S., complicated by a Ukraine war that has driven oil prices to around their highest levels in a decade. Consumer prices increased 7.5% from a year ago in January, and the Fed's preferred inflation gauge showed its strongest 12-month gain since 1983.

Powell and his fellow policymakers have been indicating for weeks that they plan to start raising benchmark interest rates to tackle inflation. He reiterated the stance Wednesday that the process will involve «interest rate increases,» along with indications that the Fed eventually will start reducing its bond holdings.

«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,» he said. «We have phased out our net asset purchases. With inflation well above 2