Federal Reserve Chairman Jerome Powell said Wednesday that the central bank still plans on raising interest rates despite the “highly uncertain” economic effects of the war in Ukraine.

“The bottom line is we will proceed but we will proceed carefully as we learn more about the implications of the Ukraine war,” Powell told the House Financial Services Committee.

In unusually clear commentary, the central bank’s top official added that he supports increasing short-term interest rates by 0.25% in the next policy-setting meeting on March 15 and 16.

That commentary shoots down prior expectations that high inflation in the U.S. would spur the central bank to more aggressively raise interest rates (and thus, borrowing costs) through a “double” interest rate increase of 0.50% (which hasn’t happened since 2000).

Russia’s invasion of Ukraine deflated expectations for that more aggressive move, with Fed funds futures on the CME Group pricing in a 97% chance of only a 0.25% move headed into Powell’s testimony.

Harsh economic sanctions on Russia appear to be crippling their economy. As Western nations imposed sanctions on the Central Bank of Russia and the country’s largest banks, the Russian ruble rapidly devalued against the U.S. dollar. Long lines outside of Russian banks underscore the concern over a bank run on their largest financial firms.

As firms like Moody’s place Russia’s credit rating on review for downgrade, some are raising questions about the spillover effects of a possible Russian economic collapse.

Powell told Congress that the Fed is “monitoring the situation closely,” adding that it is too soon to gauge if the U.S. economy will be impacted. Still, the Fed chief acknowledged that the measures against Russia have so far “been significant.”

'A time when inflation is highly elevated'

For the Fed, the immediate concern remains higher prices. A fresh read on inflation is expected on March 10 — just a few days ahead of the March meeting. Forecasters are predicting the data to show a 7.9% year-over-year increase in February, which would be a further acceleration from the 7.5% pace seen in January (the highest since 1982).

The Fed hopes that raising interest rates for the first time in three years will quell the consumption that has been driving prices higher.

“There is an important job for us to move away from these very highly stimulative monetary policy setting to a more normal level of rates and perhaps tighter at a time when inflation is highly elevated and that is what the committee plans to do,” Powell said Wednesday.