Federal Reserve Chairman Jerome Powell said Wednesday that the U.S. central bank is on track to raise its key interest rate from near-zero later this month, despite acknowledging the high uncertainty stemming from Russia's invasion of Ukraine.

"With inflation well above 2 percent and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month," Powell said in his testimony to the House of Representatives Financial Services Committee.

But he noted that the near-term effects on the U.S. economy of Russia's attack on Ukraine as well as from the economic sanctions imposed on Moscow by the United States and other countries remain "highly uncertain."

"We will be monitoring the situation closely," he said.

Federal Reserve Board Chair Jerome Powell testifies before the House of Representatives Financial Services Committee on March 2, 2022, in Washington. (Getty/Kyodo)

Following the previous meeting of its policy-setting Federal Open Market Committee in January, the central bank said it intended to start the rate lift-off "soon" as concern continued to grow over rising inflation that could weigh on U.S. economic recovery from the coronavirus pandemic.

The bank has kept its benchmark interest rate at 0 to 0.25 percent since March 2020. Meanwhile, it has been tapering its massive asset purchases, another emergency measure introduced to shield the economy from the fallout of the pandemic, toward ending the program in early March this year.

Powell said Wednesday he is "inclined to propose and support" a 0.25-point rate rise during the two-day FOMC meeting from March 15 -- the first of what he hopes to be a series of rate hikes this year.

On the current economic situation and the outlook, the Fed chief said the spread of the highly contagious Omicron variant of the coronavirus led to some slowing in economic activity early this year, but the slowdown seems to have been "brief" with COVID-19 cases having declined sharply since mid-January.

The central bank continues to expect that inflation, which has been driven by pandemic-linked supply chain disruptions, will decline over the course of the year as supply constraints ease and demand moderates due to waning effects of fiscal support and the removal of monetary policy accommodation, according to Powell.

But the Fed is "attentive to the risks of potential further upward pressure" on prices "from a number of factors," he added.

He also said the central bank is prepared to "move more aggressively" by raising the federal funds rate by more than 0.25 point "at a meeting or meetings" depending on developments with regard to inflation.

Asked about the impact of sanctioning Russia by cutting off some of its banks from a key international payment system called SWIFT, Powell ruled out any significant "direct effects" on the U.S. economy, as U.S. financial institutions "do not have large interactions with the Russian economy."

But he said such major actions involving the United States, the European Union, Japan and other countries may well have "unintended and unexpected effects" and it would be difficult to predict the impacts that may be seen over time.