Federal Reserve Chair Jerome Powell made clear Wednesday that the Fed will begin raising interest rates this month in a high-stakes effort to restrain surging inflation.

       In prepared testimony he will deliver to a congressional committee, Powell cautions that the financial consequences of Russia's invasion of Ukraine are “highly uncertain.” He says the Fed will “need to be nimble” in responding to unexpected changes resulting from the war or the sanctions that the United States and Europe have imposed in response.

       The Fed is widely expected to raise its benchmark short-term interest rate several times this year beginning with its March 15-16 meeting. In his testimony, Powell provided little additional guidance about how quickly the Fed would do so.

       A rate hike next month would be the first since 2018. And it would mark the beginning of a delicate challenge for the Fed: It wants to increase rates enough to bring down inflation, which is at a four-decade high, but not so fast as to choke off growth and hiring. Powell is betting that with the unemployment rate low, at 4%, and consumer spending healthy, the economy can withstand modestly higher borrowing costs.

       When the Fed raises its short-term rate, borrowing costs also typically rise for a range of consumer and business loans, including for homes, autos and credit cards.

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       Powell acknowledged that consumer price increases have jumped far above the Fed's target of 2% — inflation hit 7.5% in January compared with a year earlier — and that higher prices had persisted longer than expected.

       “We understand that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation,” the Fed chair says in his testimony.

       Still, he adds that the central bank expects inflation to gradually decline this year as tangled supply chains unravel and consumers pull back a bit on spending.