Federal Reserve Chairman Jerome Powell on Wednesday once again said that he thinks the sharp rise in inflation seen so far this year will fade away.

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Powell said in testimony delivered to the House Financial Services panel.

Later during the question-and-answer session, Powell said inflation has come in higher than the central bank was “hoping to see.”

On Tuesday, the U.S. June consumer price index rose more than expected, jumping by 0.9%, and the rate of inflation in the 12 months ended in June climbed to 5.4% from 5%. The last time prices rose that fast was in 2008, when oil hit a record $150 a barrel.

Powell cited three factors for higher inflation: “base effects” when weak readings of inflation index last year drop out of the 12-month calculation, production bottlenecks or supply constraints that have led to sharp price increases after the pandemic, and a surge in demand for services as the economy reopens.

“We’re seeing the same parts of the economy that are producing this inflation, it’s a pretty narrow group of things that are producing these high readings,” Powell said.

“We’re anxious just like everybody else to see that inflation pass through,” the Fed chairman said.

Luke Tilley, chief economist at Wilmington Trust, said he didn’t detect any increase in concern about the inflation outlook from Powell’s testimony.

The Fed’s forecast expects its favorite measure of inflation, the personal consumption expenditure price index, to fall from 3.4% this year to 2.1% in 2022 and 2.2% in 2023.

Powell said it would be a “mistake” for the Fed to “act prematurely” to combat inflation that, in the end, should be transitory.

Some economists are worried that the Fed is being slow to react to higher inflation readings.

Former U.S. Treasury Secretary Larry Summers on Wednesday said he is even more worried than he was originally about the economy overheating.

The Fed has kept its policy interest rate near zero and is buying $120 billion per month of bonds to support the economy and keep interest rates low. Last December, the Fed said it would keep buying assets until there was “substantial” progress towards its goals of full employment and stable long-run 2% inflation.

“While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue,” Powell said.

Minutes of the Fed’s last policy meeting in June showed the central bankers discussed when to slow down the asset purchases, but no decision was reached.

“We will continue these discussions in coming meetings,” Powell told the House panel.

Tilley said he expects Powell to use his speech at Jackson Hole, Wyo., in late August to explain exactly what “substantial” progress actually means. Then, in subsequent meetings, the Fed could report on the progress toward that benchmark and “announce a tapering before the end of this year or possibly right at the beginning of next year.”

“They are so conscious of not creating a taper tantrum again that this is going to be a slow roll toward taper,” Tilley said, in an interview.

As he had said at his press conference in June, Powell said the Fed would be prepared to shift policy “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 said he didn’t think the Fed’s purchases of mortgage bonds were driving home prices higher.

In his testimony, Powell said the labor market has improved “but there is still a long way to go.” Participation in the labor market has not moved up from the low rates of the pandemic, he noted.

But again, the outlook was positive,

“Job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic-related factors currently weighing them down diminish,” Powell said.

The Fed chairman said the central bank continues to monitor the financial system for vulnerabilities like asset bubbles.

But Powell did not sound alarmed, saying that “household balance sheets are, on average, quite strong, business leverage has been declining from high levels, and the institutions at the core of the financial system remain resilient.”

Later Wednesday, the Fed’s Beige Book report on current economic conditions called growth “robust.”

Powell also said the Fed will issue a pivotal report on a proposed digital dollar sometime around early September. Powell said that stablecoins might be a part of the “payments universe” but first need an appropriate regulatory framework. The Fed doesn’t think crypto assets will be part of the payment system, he added.

U.S. stocks were mixed on Wednesday, with the Dow Jones Industrial Average

and S&P 500 index

closing higher while the tech-heavy NASDAQ

index slipped.

The yield on the 10-year Treasury note

remains well below the 1.75% high reached in late March.

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