Jerome H. Powell, the chair of the Federal Reserve, is about to inform House lawmakers that the United States stays a “long way” away from low and steady inflation even 15 months into the central financial institution’s marketing campaign to chill the economic system and wrestle down fast worth will increase.

Mr. Powell is scheduled to testify before the House Financial Services Committee at 10 a.m. He will clarify to lawmakers that the labor market stays very tight and that inflation — whereas it has come down notably from its peak final summer time — continues to be too quick. In gentle of that, the Fed might increase rates of interest even increased than their present stage of simply above 5 p.c.

“Inflation has moderated somewhat since the middle of last year,” Mr. Powell will say, in line with the textual content of his ready remarks. “Nonetheless, inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go.”

Fed officers left interest rates unchanged final week following 10 straight will increase. But central bankers have been adamant that the choice to hit pause didn’t quantity to a declaration of victory over inflation. Instead, transferring extra progressively will give policymakers time to evaluate how nicely increased charges are working to gradual the economic system as they attempt to strike a fragile steadiness of doing sufficient to chill progress with out doing an excessive amount of.

“Considering how far and how fast we have moved, we judged it prudent to hold the target range steady,” Mr. Powell will inform lawmakers on Wednesday. Still, he will even add that “nearly all” voting Fed officers “expect that it will be appropriate to raise interest rates somewhat further by the end of the year.”

Central bankers forecast of their contemporary economic projections final week that they may most likely increase rates of interest to round 5.6 p.c this yr, which might quantity to 2 extra quarter-point charge will increase. Mr. Powell mentioned throughout his news convention following the choice final week that the Fed’s July 25-26 assembly will probably be “live,” which means {that a} charge enhance is feasible at that gathering.

Investors only expect the Fed to make yet another charge enhance earlier than holding them regular by means of the remainder of the yr, primarily based on market pricing, although vital uncertainty stays round that forecast — markets place some odds on increased charges, and a few odds on a charge minimize earlier than the top of 2023.

The Fed might want to assess how a lot the economic system is slowing, and whether or not that’s more likely to be sufficient to return inflation to their 2 p.c purpose over time. Overall progress and the housing market have cooled since 2021, however consumption and even residence costs have proven latest signs of strength and hiring has remained fast.

“We have been seeing the effects of our policy tightening on demand in the most interest rate–sensitive sectors of the economy,” Mr. Powell will inform lawmakers. “It will take time, nevertheless, for the complete results of financial restraint to be realized, particularly on inflation.”