Jay Powell, the chair of the Federal Reserve, said the US central bank was ready to intervene if inflation spiralled out of control, but stressed that he expected price increases to ease later in the year.

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell said in prepared remarks released ahead of a hearing at the House financial services committee on Wednesday.

He added that the Fed “would be prepared to adjust the stance of monetary policy as appropriate if we saw signs that the path of inflation or longer-term inflation expectations were moving materially and persistently beyond levels consistent with our goal”.

Powell’s comments came in the wake of data showing the US consumer price index rose 5.4 per cent in June compared with a year ago, which revived concerns that the US economy may be overheating.

The figures could raise pressure on the US central bank to more rapidly begin the process of slowing the large doses of monetary support it delivered to the economy during the pandemic, starting with a reduction of the $120bn in monthly asset purchases.

Although Powell noted the higher inflation figures and insisted the Fed would not be complacent about rising prices, he stuck to his view that the inflation surge was temporary, which is shared by many central bank officials.

“Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation,” according to Powell’s remarks.

“In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind.

“Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy,” he added.

During the hearing, Powell is likely to be pressed by Republican lawmakers to explain the Fed’s position on inflation. Republicans are increasingly criticising the White House and Democrats for fuelling rising inflation and higher living costs by way of the $1.9tn stimulus legislation passed in March.

Some are also accusing the Fed of being complacent in the face of higher prices, and calling for the rapid removal of monetary stimulus.

But many Fed officials are wary of moving too quickly to pull back their support for the economy. The US labour market is still far short of its pre-pandemic employment levels, and fallout from the coronavirus crisis on a global scale could still pose risks for the American economy.