Jay Powell fended off a barrage of questions from testy Republicans and anxious Democrats in Congress on Wednesday as he sought to ease concerns over the Federal Reserve’s response to surging US inflation.

The Fed chair pushed back against suggestions that the central bank might be complacent about inflation risks during his appearance at the House financial services committee. Powell said the Fed was ready to act if needed to tame prices and that he sympathised with public concern over rising prices.

“I know people are very worried about inflation,” Powell said. “We hear that loud and clear from everybody . . . it is really going through the economy and through every business.”

The hearing came a day after official figures showed that the consumer price index had jumped by an annual rate of 5.4 per cent in June, fuelling worries that the world’s largest economy is overheating.

However, the central bank chief largely stuck to his view that the inflation increases would be transitory and eventually subside.

During the three-hour long virtual hearing Powell did not break any new ground on monetary policy, reiterating that the central bank would continue discussions later this month on reducing its $120bn in monthly asset purchases. The Fed is not yet debating a rise in its main interest rate from its rock bottom level.

But the Fed chair took some heat from lawmakers on recent US inflation data, which has been significantly higher than predicted by central bank officials and many economists.

Frank Lucas, a Republican lawmaker from Oklahoma, said: “I’m nervous. How much longer can we sustain numbers like this before you become nervous?”

Lucas added: “I will sleep with one eye open until these numbers begin to come down and if they do not, then I realise, like your predecessors, you’ll have to take the necessary action.”

Ann Wagner, a Missouri Republican, admonished the Fed chair as well. “I can tell you that the families and businesses that I represent . . . aren’t feeling that these price spikes are very temporary.”

Some Democrats expressed concern too.

David Scott, a member of Congress from Georgia, said “a return to a more stable inflation rate would be indeed advantageous” and fretted that “wage increases will not keep pace, creating real hardship for people on fixed income, retirees, and low income households”.

Meanwhile, Madeleine Dean, a congresswoman from the suburbs of Philadelphia, pressed Powell on supply chain bottlenecks that are driving up costs in the car sector. “How can I explain this to my constituents? What should we be watching?”

In response to the questions, Powell sought to strike a balance between accepting that the inflation readings had caught the Fed off-guard so far, while also stressing that the big picture had not changed.

He said: “It is still the same story. It is still the same parts of the economy that are producing this inflation. It is a pretty narrow group of things that are producing these high readings, but we are anxious like everybody else to see that inflation pass through.”

Powell also urged lawmakers to have “faith” in the Fed’s judgment that it was still riskier to tighten policy too early than too late.

“We really do believe and virtually all forecasters do believe that these things will come down of their own accord as the economy reopens — it would be a mistake to act prematurely.”

But the Fed chair said that in six months’ time the central bank would have a much firmer grip on both inflation and labour market data, which would help it make any further policy decisions.

As Powell spoke, the Fed released its Beige Book, an anecdotal assessment of economic conditions from the regional US reserve banks, which showed price pressures building across the economy.

The report said that while some respondents “felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months”.

Fed officials are wary of moving too quickly to pull back their support for the US economy. The labour market is still far short of its pre-pandemic employment levels, and fallout from the global coronavirus crisis could still pose risks for the American economy.

Some Democrats urged Powell to reject any pressure to tighten monetary policy too quickly. Alexandria Ocasio-Cortez, the progressive Democrat representing New York City, worried that a “misplaced diagnosis” could lead the Fed to raise interest rates before the labour market reaches its full potential.

“This means millions of Americans, especially marginalised communities of colour, will be left with limited opportunities to be employed at an adequate, liveable wage,” she warned.

US government debt extended its rally as Powell testified, with the yield on the benchmark 10-year Treasury note trading more than 0.06 percentage points lower on the day to 1.35 per cent.