The US Federal Reserve chair, Jerome Powell, said on Wednesday that the central bank still expects to reduce its benchmark interest rate later this year but warned continued progress on inflation “is not assured”.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said in remarks prepared for delivery to the House financial services committee as US lawmakers prepare to face inflation-weary voters in a charged presidential election year.

“But the economic outlook is uncertain, and ongoing progress toward our 2% inflation objective is not assured,” Powell said, noting as he has of late both the risk of cutting rates too soon and allowing inflation to reaccelerate and the risk of keeping monetary policy too tight for too long and damaging an ongoing economic expansion that has sustained a below 4% unemployment rate for two years.

Powell noted that inflation had “eased substantially” since hitting 40-year highs in 2022, but that policymakers still needed “greater confidence” in its continued decline before cutting rates.

Recent data has done little to clarify the direction of the economy and inflation, with some analysts projecting price pressures to steadily ease, others anticipating inflation will persist, and investors expecting rate cuts to start in June – a key decision that will shape the economic landscape during an electoral rematch between incumbent Joe Biden and former president Donald Trump.

Powell’s testimony comes at a time when inflation is now by some measures within striking distance of the Fed’s 2% target, but also as the economy remains unexpectedly strong.