By Yasin Ebrahim
Investing.com - Federal Reserve Chairman Jerome Powell repeated Tuesday the Federal Reserve's view that any inflation rise this year will likely be a "one-off," but stressed the central bank has the tools to ensure inflation is kept well anchored to its 2% target.
The expected sharp jump in inflation as the economy reopens "will not be persistent," but rather prove to be "one-time" surge following years of global deflationary pressure, Powell said in testimony before the House Financial Services Committee in Washington on the economic response to COVID.
In prepared remarks, Powell acknowledge that the recovery has progressed more quickly than expected, but stress that the Fed will "continue to provide the economy the support that it needs for as long as it takes ... as sectors of the economy most adversely affected by the resurgence of the virus, and by greater social distancing, remain weak."
In joint testimony alongside Powell, U.S. Treasury Secretary Janet Yellen, meanwhile, was quizzed on impact of the administration's plans to raise taxes on jobs and workers wages.
Yellen said the impact of corporate tax hikes on prices and consumers are "very unclear" from existing studies, but added the funds raised from taxes would help fund the government's spending plan including an infrastructure package and the creation of good jobs in the economy.
On asset valuations, Yellen and Powell differed somewhat. Yellen said asset prices are "elevated," while Powell said the outlook was mixed as some assets were a "bit high."
The S&P 500 was down 0.2%, while the U.S. 10-year yield was down at 1.64%.