Fed Chair Jerome Powell speaks to reporters in October 2019. Photo courtesy of the Federal Reserve.

Economists say they were surprised by the likely timing and intensity of the Federal Reserve’s rate hikes Chair Jerome Powell sketched out Wednesday.

Economists say the approach contrasts with the Fed’s actions in 2015, when the it began to raise rates slowly. Powell said Wednesday that the economy is stronger today than it was in 2015.

“The Fed is signaling that they are going to be moving earlier, and maybe at a quicker pace, than we thought,” said Steve Rick, chief economist at CUNA Mutual Group.

The Federal Reserve signaled that it will begin a series of interest-rate hikes in March, reversing pandemic-era policies that have fueled hiring and growth — and stock market gains — but also stubbornly high inflation, but .

Powell said at a news conference that inflation has gotten “slightly worse” since the Fed last met in December. He said raising the Fed’s benchmark rate, which has been pegged at zero since March 2020, will help prevent high prices from becoming entrenched.

Seeking to calm fears that higher rates might hurt the economy, Powell said the central bank can manage the process in a way that prolongs growth and keeps unemployment low. “I think there is quite a bit of room to raise interest rates without threatening the labor market,” he said.

The Fed’s rate hikes will make it more expensive, over time, to borrow for a home, car or business.

“The news today was the release of principles regarding how the Fed will think about moving from their current almost $9 trillion balance sheet to a smaller portfolio over time. While the experience shrinking the balance sheet in the last cycle was instructive, we do expect that the Fed will move to begin allowing runoff more quickly this time and at a faster pace once it starts. Finally, the principle that they would like to return to a balance sheet that is primarily Treasuries at some point hints at some additional pressure on MBS yields over the medium term,” Mortgage Bankers Association Chief Economist Mike Fratantoni said in a statement. “MBA is holding on to our forecast that the combination of a stronger economy, persistent inflation, and the reduction of monetary policy accommodation will all push towards somewhat higher mortgage rates, with the 30-year fixed rate hitting 4% by the end of 2022.”

The Fed’s intent is to temper economic growth and cool off inflation, which is at a 40-year high and eating into Americans’ wage gains and household budgets.

“The best thing we can do to support continued labor market gains,” Powell said, “is to promote a long expansion, and that will require price stability.”

The central bank’s latest policy statement follows dizzying gyrations in the stock market as investors have been gripped by fear and uncertainty over just how fast and far the Fed will go to reverse its low-rate policies, which have nurtured the economy and the markets for years. The broad S&P 500 index fell nearly 10 percent this month and fell slightly Wednesday.

Asked about the stock market’s wild volatility, Powell stressed that the Fed’s “ultimate focus” is on the “real economy.” But he suggested that the recent market moves are a positive sign: “We feel like the communications we have with market participants and the general public are working.”

The central bank faces a delicate and even risky balancing act. If the stock market is engulfed by more chaotic declines, economists say, the Fed might decide to delay some of its credit-tightening plans. Modest drops in share prices, though, won’t likely affect the Fed’s thinking.

“The risk is for a faster pace of Fed tightening given the stickiness of inflation,” said Kathy Bostjancic, an economist at Oxford Economics, a consulting firm.

Supply-chain and labor-market constraints have lasted longer than the Fed anticipated. Consumer prices are rising at 7 percent — well above the Fed’s long-run inflation target of 2 percent — and Powell said the outlook for the U.S. economy remains uncertain.

Powell said that while he thinks shipping bottlenecks and labor constraints will ease over time, it’s critical for Fed policymakers to have “humility” and to be “nimble” in their decision-making.

For now, Powell said Fed policymakers are “of a mind to raise the federal funds rate at the March meeting, assuming that conditions are appropriate for doing so.”

The Fed also said it will phase out in March monthly bond purchases that have been intended to reduce longer-term rates. And in another step that will tighten credit, the policymakers said they would start reducing their huge $9 trillion balance sheet this year, which some economists think will start by July.

Powell and the Fed were “very, very clear that rate hikes are imminent, that the scope for rate hikes is large, and that they are moving quickly toward reducing the size of the Fed balance sheet,” said Eric Winograd, U.S. economist at AB, an asset manager.

Some economists have expressed concern that the Fed is already moving too late to combat high inflation. Others say they worry that the Fed may act too aggressively. They argue that numerous rate hikes could unnecessarily slow hiring. In this view, high prices mostly reflect snarled supply chains that the Fed’s rate hikes are powerless to cure.

Powell has acknowledged that he failed to foresee the persistence of high inflation, having long expressed the belief that it would prove temporary.

The inflation spike has broadened to areas beyond those that were affected by supply shortages — to apartment rents, for example — which suggests it could endure even after goods and parts flow more freely.

AP staff writer Paul Wiseman contributed to this report.