08:56 AM EST, 03/06/2024 (MT Newswires) -- It is likely that the Federal Open Market Committee will be able to lower interest rates at some point this year, but inflation remains a risk, Federal Reserve Chair Jerome Powell said Wednesday in prepared remarks to be delivered to House Financial Services Committee.

Powell's testimony begins at 10 am ET followed by a question-and-answer session.

"We believe that our policy rate is likely at its peak for this tightening cycle," Powell is expected to say. "If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year. But the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured."

Powell said inflation has "eased substantially" without a large increase in unemployment, moving the risks to achieving its inflation and employment goals into better balance.

"Even so, the committee remains highly attentive to inflation risks and is acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials, like food, housing, and transportation," he said. "The FOMC is strongly committed to returning inflation to its 2 percent objective. Restoring price stability is essential to achieve a sustained period of strong labor market conditions that benefit all."

Powell cautioned that loosening policy too early or too much could reverse the inflation progress made to date while keeping rates elevated for longer than needed could weaken the economy and employment.

"In considering any adjustments to the target range for the policy rate, we will carefully assess the incoming data, the evolving outlook, and the balance of risks," he said. "The committee does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."