Eighteen months into the pandemic, Jerome H. Powell, the Federal Reserve chair, has provided the strongest signal but that the Fed is ready to quickly withdraw one leg of the assist it has been offering to the economic system as situations strengthen.

On the similar time, Mr. Powell made clear on Friday that rate of interest will increase remained far-off, and that the central financial institution was monitoring dangers posed by the Delta variant of the coronavirus.

The Fed has been attempting to bolster financial exercise by shopping for $120 billion in government-backed bonds every month and by leaving its coverage rate of interest at all-time low. Officers have been debating when to start slowing their bond shopping for, step one in shifting towards a extra regular coverage setting. They’ve mentioned they wish to make “substantial additional progress” toward stable inflation and full employment earlier than doing so.

Mr. Powell, speaking at a closely watched conference that the Kansas Metropolis Fed holds annually, used his remarks to elucidate that he thinks the Fed has met that take a look at with regards to inflation and is making “clear progress towards most employment.”

As of the Fed’s final assembly, in July, “I used to be of the view, as have been most members, that if the economic system advanced broadly as anticipated, it could possibly be applicable to begin lowering the tempo of asset purchases this yr,” he mentioned.

However the Fed is navigating a troublesome set of financial situations. Development has picked up and inflation is rising as shoppers, flush with stimulus cash, look to spend and firms battle to fulfill that demand amid pandemic-related provide disruptions. But there are almost six million fewer jobs than earlier than the pandemic. And the Delta variant might trigger shoppers and companies to tug again because it foils return-to-office plans and threatens to close down faculties and youngster care facilities. That would result in a slower jobs rebound.

Mr. Powell made clear that the Fed needs to keep away from overreacting to a latest burst in inflation that it believes will almost definitely show non permanent, as a result of doing so might go away employees on the sidelines and weaken progress prematurely. Whereas the Fed might begin to take away one piece of its assist, he emphasised that slowing bond purchases didn’t point out that the Fed was ready to boost charges.

“We’ve got a lot floor to cowl to achieve most employment, and time will inform whether or not we’ve reached 2 p.c inflation on a sustainable foundation,” he mentioned in his tackle to the convention, which was held on-line as a substitute of its standard venue — Jackson Gap in Wyoming — due to the most recent coronavirus wave.

The excellence he drew — between bond shopping for, which retains monetary markets chugging alongside, and charges, that are the Fed’s extra conventional and arguably extra highly effective software to maintain cash low-cost and demand robust — despatched an necessary sign that the Fed goes to watch out to let the economic system heal extra absolutely earlier than actually placing away its financial instruments, economists mentioned.

“He’s attempting to reassure, in a time of extraordinary uncertainty,” mentioned Diane Swonk, chief economist on the accounting agency Grant Thornton. “The takeaway is: We’re not going to snuff out a restoration. We’re not going to snuff it out too early.”

Shares rose on Friday, with positive factors selecting up steam after Mr. Powell’s feedback have been launched and buyers realized {that a} price improve was not in sight.

Richard H. Clarida, the Fed’s vice chair, agreed with Mr. Powell’s method, saying in an interview with CNBC that if the labor market continued to strengthen, “I’d additionally assist commencing a discount within the tempo of our purchases later this yr.”

Some Fed policymakers have referred to as for the central financial institution to sluggish its purchases quickly, and transfer swiftly towards ending them utterly.

Raphael Bostic, the president of the Federal Reserve Financial institution of Atlanta, told CNBC on Friday that he supported winding down the purchases “as rapidly as attainable.”

“Let’s begin the taper, and let’s do it rapidly,” he mentioned. “Let’s not have this linger.”

James Bullard, the president of the Federal Reserve Financial institution of St. Louis, mentioned on Friday that the central financial institution ought to end tapering by the top of the primary quarter subsequent yr. If inflation begins to average then, the nation might be in “nice form,” Mr. Bullard informed Fox Enterprise.

“If it doesn’t average, then I believe the Fed goes to must be extra aggressive in 2022,” he mentioned.

Central bankers try keep away from the errors of the final enlargement, once they raised rates of interest as unemployment dropped to fend off inflation — solely to have value positive factors stagnate at uncomfortably low ranges, suggesting that they’d pulled again assist too early. Mr. Powell ushered in a new policy framework ultimately yr’s Jackson Gap gathering that dictates a extra affected person method, one that may guard in opposition to an analogous overreaction.

However as Mr. Bullard’s feedback mirrored, officers could have their persistence examined as inflation climbs.

The Fed’s most well-liked value gauge, the non-public consumption expenditures index, rose 4.2 percent last month from a yr earlier, in accordance with Commerce Division knowledge launched on Friday. The rise was larger than the 4.1 p.c leap that economists in a Bloomberg survey had projected, and the quickest tempo since 1991. That’s far above the central financial institution’s 2 p.c goal, which it tries to hit on common over time.

“The fast reopening of the economic system has introduced a pointy run-up in inflation,” Mr. Powell mentioned.

Policymakers on the Fed are debating easy methods to interpret the present value burst. As a result of it has come from classes of products and companies which have been affected by the pandemic and supply-chain disruptions, together with used automobiles and airplane tickets, most count on inflation to abate. However some fear that the method will take lengthy sufficient that customers’ inflation expectations will transfer up, prompting employees to demand larger wages and resulting in sooner value positive factors within the longer run.

Different officers fear that right now’s sizzling costs usually tend to give solution to slower positive factors as soon as pandemic-related disruptions are resolved — and that long-run tendencies which have dragged inflation decrease for many years, together with inhabitants getting old, will as soon as once more chew. They warn that if the Fed overreacts to right now’s inflationary burst, it might wind up with completely weak inflation, a lot as Japan and Europe have.

White Home economists sided with Mr. Powell’s interpretation in a brand new spherical of forecasts issued on Friday. In its midsession overview of the administration’s budget forecasts, the Workplace of Administration and Finances mentioned it anticipated the Client Value Index inflation price to hit 4.8 p.c for the yr. That’s greater than double the administration’s preliminary forecast of two.1 p.c.

The forecast was an admission of kinds that costs have jumped larger and that the rise has lingered longer than administration officers initially expected. However they nonetheless insist that it is going to be short-lived and foresee inflation dropping to 2.5 p.c in 2022. The White Home additionally revised its forecast of progress for the yr, to 7.1 p.c from 5.2 p.c.

Gradual value positive factors sound like excellent news to anybody who buys oat milk and eggs, however they’ll set off a vicious downward cycle. Rates of interest embrace inflation, so when it slows, Fed officers have much less room to earn money low-cost to foster progress throughout instances of hassle. That makes it more durable for the economic system to get better rapidly from downturns, and lengthy durations of weak demand drag costs even decrease — making a cycle of stagnation.

“Whereas the underlying international disinflationary elements are more likely to evolve over time, there’s little purpose to suppose that they’ve abruptly reversed or abated,” Mr. Powell mentioned. “It appears extra probably that they may proceed to weigh on inflation because the pandemic passes into historical past.”

Mr. Powell provided an in depth clarification of the Fed’s scrutiny of costs, emphasizing that inflation is “to date” coming from a slim group of products and companies. Officers are maintaining a tally of knowledge to ensure costs for sturdy items like used automobiles — which have not too long ago taken off — sluggish and even fall.

Mr. Powell mentioned the Fed noticed “little proof” of wage will increase that may threaten excessive and lasting inflation. And he identified that measures of inflation expectations had not climbed to undesirable ranges, however had as a substitute staged a “welcome reversal” of an unhealthy decline.

Nonetheless, his remarks carried a tone of watchfulness.

“We might be involved at indicators that inflationary pressures have been spreading extra broadly by the economic system,” he mentioned.

Jim Tankersley contributed reporting.