In a fortnight, the US central bank will discuss whether to end their bond purchases a few months earlier.
The Fed chief told members of the Senate Banking Committee that the US economy continues to strengthen, job growth remains strong and high inflation, which is currently more than double the Fed's target of 2% a year, is likely to last longer than expected.
He also acknowledged that his term for describing inflation as a "temporary phenomenon" should probably be abandoned, suggesting that policymakers will make a more concerted effort to curb price increases in the coming months.
During Powell's speech, the dollar strengthened strongly against all currencies.
In November, the Fed began reducing its support for the economy and is now cutting $120 billion in monthly purchases of mortgage and treasury securities. This will last until June 2022.
Previously, the Fed had discussed accelerating the purchase cuts in order to finish and raise interest rates by the spring, as this is the only method of curbing inflation. The situation will be better understood by the Fed's December 14-15 policy meeting.
News of a new variant of the Omicron coronavirus, which is easier to transmit and existing vaccines are not as effective, prompted the Fed to push back the anticipated start of a rate hike. However, Jerome Powell's comments about a more rapid reduction in purchases, with inflation remaining in place until the end of 2022, changed the dynamic of this attitude and boosted bond yields.
Nonetheless, Powell acknowledged that Omicron was elevating the uncertainty around the outlook for the economy - and potentially adding to inflation risks - though he said he did not think its effects would be "remotely comparable" to March 2020 when the pandemic had cast the economy into a short but historically deep recession.
