The sharp rise in oil prices due to the war in the Middle East is expected to push U.S. inflation higher “in the short term,” Federal Reserve Chair Jerome Powell said today.

“The implications of developments in the Middle East for the U.S. economy are uncertain. In the short term, rising energy prices will drive inflation higher,” Powell said at a press conference. However, he added that it is “too early to determine the magnitude and duration of the potential impact on the economy.”

U.S. central bank officials now forecast that inflation could reach 2.7% by the end of 2026, up from their December projection of 2.4%.

As widely expected, the Fed kept interest rates unchanged at 3.50%–3.75%. Of the twelve members of the Federal Open Market Committee, only Stephen M. Meyers voted against the decision, favoring a 25 basis point rate cut.