"The disinflationary process has begun," Powell said, noting progress especially in goods prices. However, price gains within the services sector remain high, he added.

The Fed expects "significant" declines in inflation to occur this year. It will take "not just this year but next year to get down to 2%," the central bank's inflation target, Powell said. And rates will have to remain at a restrictive level "for a period of time" before that happens, he noted.