U.S. Federal Reserve Chairman Jerome Powell said on Monday that the central bank will, if needed, move "more aggressively" to raise federal funds rate by more than 25 basis points at its policy meetings to curb inflation.

"The labor market is very strong, and inflation is much too high," Powell said in prepared remarks for the National Association for Business Economics'(NABE) annual economic policy conference in Washington D.C.

"There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability," he said.

The Fed last week raised its benchmark interest rate by a quarter percentage point to a range of 0.25 percent to 0.5 percent from near zero. This marked its first rate hike since 2018 and a major step in exiting from the ultra-loose monetary policy enacted at the start of the pandemic.

The Fed's quarterly economic projections released last week showed that most Fed officials expect the federal funds rate to rise to 1.9 percent by the end of this year and to around 2.8 percent by the end of 2023. That implies a total of seven quarter-percentage-point rate hikes this year and another three or four next year.

At the NABE event, the central bank chief noted that the labor market is "extremely tight," significantly tighter than the very strong job market just before the pandemic, with nominal wages rising at the fastest pace in decades.

The rise in inflation, meanwhile, has been "much greater" and "more persistent" than forecasters generally expected, Powell said, noting that inflation moved up "sharply" in the fall amid continued COVID-related supply disruptions and strong demand.

At the time of the Fed's June 2021 meeting, every Federal Open Market Committee (FOMC) participant and all but one of 35 submissions in the Survey of Professional Forecasters predicted that 2021 inflation would be below 4 percent, but inflation came in at 5.5 percent, according to Powell.

Just since the Fed's December meeting, the median FOMC projection for year-end 2022 jumped from 2.6 percent to 4.3 percent.

"Why have forecasts been so far off? In my view, an important part of the explanation is that forecasters widely underestimated the severity and persistence of supply-side frictions, which, when combined with strong demand, especially for durable goods, produced surprisingly high inflation," Powell said.

Noting that the inflation outlook had deteriorated significantly this year even before the Russia-Ukraine war, the Fed chief warned that the effects of the war and the western sanctions on Russia may have significant effects on the U.S. economy.

In addition to the direct effects from higher global oil and commodity prices, the war and related events are "likely to restrain economic activity abroad and further disrupt supply chains, which would create spillovers to the U.S. economy," Powell said.

"It continues to seem likely that hoped-for supply-side healing will come over time as the world ultimately settles into some new normal, but the timing and scope of that relief are highly uncertain," said Powell, noting that the central bank will be looking to "actual progress" on these issues and not assuming significant near-term supply-side relief.

"If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so," said the Fed chief.