Fed's Powell: Inflation has increased notably in recent months.

Federal Reserve chair Jerome Powell's text from his upcoming testimony before the select subcommittee on the coronavirus crisis;

Inflation has increased notably in recent months. This reflects, in part, the very low readings from early in the pandemic falling out of the calculation; the pass-through of past increases in oil prices to consumer energy prices; the rebound in spending as the economy continues to reopen; and the exacerbating factor of supply bottlenecks, which have limited how quickly production in some sectors can respond in the near term. As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal.

The pandemic continues to pose risks to the economic outlook. Progress on vaccinations has limited the spread of COVID-19 and will likely continue to reduce the effects of the public health crisis on the economy. However, the pace of vaccinations has slowed and new strains of the virus remain a risk. Continued progress on vaccinations will support a return to more normal economic conditions.

• Fed will do everything we can to support the economy for as long as it takes to complete recovery.
• Inflation has increased notably in recent months.
• As transitory supply effects abate, inflation expected to drop back toward 2%.

Meanwhile, other policymakers including Boston Fed chief Eric Rosengren are among the numerous other officials speaking this week who may provide more clarity after St. Louis’s James Bullard said last week interest rates may need to rise in 2022.

Meanwhile, the greenback dropped on Monday but held above where it traded before the Fed's statement on Wednesday.

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