U.S. Federal Reserve Chairman Jerome Powell on Wednesday reaffirmed the central bank's plan to raise interest rates in the upcoming policy meeting, noting that he is inclined to support a 25-basis-point rate hike.

"Inflation increased sharply last year and is now running well above our longer-run objective of 2 percent," Powell said in his prepared remarks at a hearing before the House Financial Services Committee.

"Demand is strong, and bottlenecks and supply constraints are limiting how quickly production can respond," he said. "These supply disruptions have been larger and longer lasting than anticipated, exacerbated by waves of the virus."

When asked about how international events would impact the Fed's decision, Powell noted that before the Ukraine crisis, the Fed was set to raise policy rate, the first of what was to be a series of raises expected for this year, and it was also expected to make progress on plan to shrink its balance sheet.

He said it's too soon to say for sure how the ongoing war, the response from nations around the world, including sanctions may have changed that expectation, but for now, the Fed will proceed carefully with that plan.

"The thing is the economic effects of these events are highly uncertain," said the Fed chief. "So far we've seen energy prices move up further, and those increases will move through the economy and push up headline inflation. And also they're gonna weigh on spending."

"The thing is, we can't know how large or persistent those effects will be," he continued.

Powell said he thinks it will be appropriate to raise the target range for the federal funds rate at the March meeting in a couple of weeks. "And I'm inclined to propose in support a 25-basis-point rate hike," he said.

When asked whether 25 basis point is the "ceiling" or the "speed limit," the Fed chair said the central bank's decisions would be based on incoming data and the evolving outlook.

"We continue to expect inflation to decline over the course of the year as supply constraints ease and demand moderates because of the waning effects of fiscal support and the removal of monetary policy accommodation," Powell said.

"And to the extent inflation comes in higher or is more persistently high than that, then we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis point at a meeting or meetings," he said.

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