Federal Reserve chair Jerome Powell told lawmakers on Wednesday that the central bank expects to cut interest rates "at some point this year," but not until policymakers have gained confidence the war on inflation is won.

Why it matters: The Fed is assessing the risk of lowering interest rates too soon, which might reignite inflation. Keeping borrowing costs too high may do unnecessary damage to the economy, which has avoided a recession so far.

What he's saying: "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 before the House Financial Services Committee.

• "But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured," Powell said.
• The Fed's policy committee "does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

The big picture: Key data out last month showed that getting inflation back to the Fed's 2% target might take longer than expected.

• In recent weeks, Fed officials have reiterated that they want further proof that inflation is truly receding before cutting interest rates.
• In response to a question from Rep. Patrick McHenry (R-N.C.), Powell said that the Fed can afford to wait a bit longer before deciding when to cut rates.
• "We think because of the strength in the economy and the strength and the labor market ... we can approach that step carefully and thoughtfully," Powell said.

Zoom in: A key question from lawmakers Wednesday dealt with the status of a contentious bank regulatory proposal released last year by the Fed and other regulatory agencies.

• Among other requirements the proposal would hike capital requirements for big banks. It's faced fierce criticism, including from some top officials at the Fed.
• "We do hear the concerns and I do expect that there will be broad and material changes to the proposal," Powell said, adding that a re-proposal was a "plausible" option.
• "I am confident that the final product will be one that does have broad support both at the Fed and in the broader world," Powell said.

Go deeper: January inflation pickup eats into income gains

Editor's note: This story has been updated with a new photo and additional details from Wednesday's hearing.