Federal Reserve Chairman Jerome Powell said he would propose a quarter-percentage point rate increase at the central bank’s meeting in two weeks amid high inflation, strong economic demand and a tight labor market, offering an unusually explicit preview of anticipated policy action.

Mr. Powell said Wednesday that, before Russia’s invasion of Ukraine last week, he expected the central bank would follow that initial rate rise with a series of increases this year.

“For...

Federal Reserve Chairman Jerome Powell said he would propose a quarter-percentage point rate increase at the central bank’s meeting in two weeks amid high inflation, strong economic demand and a tight labor market, offering an unusually explicit preview of anticipated policy action.

Mr. Powell said Wednesday that, before Russia’s invasion of Ukraine last week, he expected the central bank would follow that initial rate rise with a series of increases this year.

“For now, I would say that we will proceed carefully along the lines of that plan,” Mr. Powell told the House Financial Services Committee on Wednesday. “We’re going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment.”

While it was too soon to say how the war and heavy sanctions imposed by the West against Moscow would influence the U.S. economy, he revealed general urgency to continue tightening policy.

The S&P 500 rose 1.9% Wednesday, a day after the index fell 1.6%. Yields on benchmark 10-year Treasury notes have been especially volatile. They rose to 1.862%, from 1.708% Tuesday and 1.836% on Monday.

Fed Chairman Jerome Powell told a House committee Wednesday: ‘The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain.’

Photo: shawn thew/Shutterstock

Mr. Powell effectively ended a debate in markets and among other Fed officials over whether they would lift rates from zero this month with a larger half-percentage-point increase. At the same time, he laid the groundwork for the possibility of half-point increases this summer, pushing back against the idea that more traditional quarter-point increases represent a speed limit for the Fed.

Consumer prices in January rose 6.1% from a year earlier, according to the Fed’s preferred gauge. Excluding volatile food and energy categories, so-called core inflation rose 5.2%, close to a 40-year high. “This is strong, high inflation, and it’s very important that we get on top of it, and that’s exactly what we’re going to do,” Mr. Powell told lawmakers.

Mr. Powell said his colleagues expected inflation to peak and diminish soon. “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 rates by a half percentage point at one or more meetings later this year. The Fed hasn’t raised rates by a half point since 2000.

Mr. Powell also said he expected the Fed would also make “good progress” preparing its plans to shrink its $9 trillion asset portfolio, but that it would not finalize those plans at its March 15-16 meeting.

The global economy has been recovering from a series of “supply shocks,” in which shortages of goods or services drive up their prices. Textbooks call for central banks not to react to one-off increases in prices that result from temporary factors, such as natural disasters, and to instead focus on broader underlying inflation pressures.

Officials are turning anxious, however, about an overheated labor market with wage gains well above their pre-pandemic highs, and the risk that consumers and businesses will expect bigger price increases in the future, fostering persistently higher inflation.

Fed officials last spring and summer attributed most of the rise in inflation to supply-chain bottlenecks, which wouldn’t necessarily demand a policy response if those kinks were expected to resolve themselves in a few months. On Wednesday, Mr. Powell suggested high inflation was resulting from the collision of both strong demand and supply constraints. The emphasis on demand is important because Fed interest-rate increases can bring supply and demand into balance by slowing down hiring and economic activity more broadly.

Mr. Powell said a shortage of workers was driving up wages, and the Fed was watching carefully for signs that the war in Ukraine would further drive up prices. The Fed wouldn’t have to raise rates as much, he said, if bottlenecks eased and more workers returned to the labor market.

The Federal Reserve has signaled it plans to raise interest rates in 2022 in response to stubbornly high inflation. WSJ’s J.J. McCorvey explains what higher rates could mean for your finances. Photo illustration: Todd Johnson The Wall Street Journal Interactive Edition

“Honestly, we have the tools and we will use them to get inflation under control, but to the extent we get help from the supply side, it’ll make that job so much easier,” he said.

His remarks underscore the challenge facing the central bank as it prepares to raise interest rates for the first time since 2018. During geopolitical shocks, the Fed generally avoids taking steps that increase uncertainty. But with inflation running far above its 2% target and the Ukrainian crisis threatening to push prices even higher, the Fed could feel more pressure to raise rates.

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While Russia’s direct trade links to the U.S. economy aren’t significant, Mr. Powell cited the risk of unintended and downstream effects of rising prices for oil, natural gas, and other commodities for which Russia is a major exporter including neon, palladium, wheat and fertilizer. “Events like a war … will drive up the price of oil and gas, and that’ll get into prices certainly,” he said.

Lawmakers pressed Mr. Powell on the Fed’s previous view that inflation pressures would abate more quickly on their own last year. “I always thought there was a chance we’d be wrong, and that if we were wrong, we’d be able to pivot, and we did pivot, and we pivoted pretty quickly” last December, he said. “But by then, the economy really was moving very, very fast.”

Still, he said the labor market was strong enough that the economy should be able to withstand higher rates. He said he was hopeful the economy could slow enough to slow rising prices and wages without producing a recession or a period of high inflation like one witnessed in the 1970s—a so-called soft landing.

“We haven’t faced this challenge in a long time, but we all know the history and we all know what we need to do,” Mr. Powell said. “I think it’s more likely than not that we can achieve what we call a soft landing.”

Later, when pressed over whether the Fed’s response might have to be so strong that such a soft landing would be impossible, he said, “there are no guarantees in life. But that is our intention, and what we propose to do.”

Write to Nick Timiraos at nick.timiraos@wsj.com