Federal Reserve officials signaled a deep commitment to wrestling down the highest inflation in more than four decades, even as supply disruptions that are largely outside of their control help to push prices sharply higher.
Jerome H. Powell, the Fed chair, called the central bank’s commitment to bringing price increases under control “unconditional” while testifying before House lawmakers Thursday. His colleague Michelle Bowman, a Fed governor, signaled in an unscheduled speech that she would favor a three-quarter point increase in July and half-point increases at the “next few” meetings after that — keeping up an aggressive path of policy change — as the central bank tries to tamp down costs.
“These actions do not come without risk,” Ms. Bowman said. “But in my view, our No. 1 responsibility is to reduce inflation.”
The Fed is overseeing an economy in which growth is strong and consumers are spending. At the same time, shipping issues, factory shutdowns in Asia and the war in Ukraine have kept the supplies of manufactured goods, gas and food limited, while domestic labor shortages have limited how many flights airlines can offer and meals that restaurants can supply. As robust demand collides with curtailed supply, prices have surged.
The Fed’s main policy tool, raising interest rates, can do little to improve limited supply but can help to cool off demand. Higher mortgage and credit card rates can tamp down home buying and consumer spending, and more expensive business loans can slow down corporate expansions and hiring.
The Fed has already started raising interest rates, which are now set in a range between 1.50 to 1.75 percent.
While countries around the world are combating supply chain issues that have spurred rapid inflation, Fed officials have underlined that the United States also has rapid growth and a solid job market. That might give it room to try to moderate business activity and lower price increases without causing an outright downturn.
“We actually have a very strong economy,” Mr. Powell told lawmakers on Thursday, when asked about the global situation. “More of our inflation is from demand, and we do have tools to work on demand.”
But Mr. Powell has also been clear that while it is possible that the central bank could engineer a soft landing, it will be a challenge. Interest rates are blunt, and it will be hard to cool down price increases while maintaining a strong economy and job market as shocks continue to rock the economy and curb supply.
“We have a job to do, and it’s very important that we do it,” Mr. Powell said. “The only way we can get back to a place where inflation is low again” is “by trying to get demand and supply back in balance.”