US Federal Reserve Chairman Jerome Powell said that the country's central bank will keep lending rates low, meaning that the monetary policy will stay in place for a while until the economy recovers from the shocks of the pandemic. Pushing back on suggestions that loose monetary policy might unleash inflation and other financial risks, he said that the Fed would focus on getting Americans back on their feet. Although the labour market has progressed since March 2020, millions of Americans are still out of work, he said. His outlook did not help markets and it pared losses. Major Wall Street indices remained negative across the board. "Monetary policy is accommodative, and it continues to need to be accommodative. Expect us to move carefully, patiently, and with a lot of advance warning, before any changes," Powell said on Tuesday. The Fed Chairman was testifying before the US Senate Banking Committee. This assurance comes as a quick recovery of markets leads to the fear of high-interest rates. While Powell believes the outlook is "highly uncertain", he expects growth to accelerate as crisis eases and vaccinations expand. On Growth Fed predicts the economy to grow in the range of 6 percent this year. Simultaneously, the overall output may return to the pre-pandemic levels in the coming weeks, Powell said. Such a rebound would have been unthinkable if not for the timely vaccine rollout and government's aid packages that bolstered the household income. He said the Fed is committed to using its range of tools to support the economy and help recover it from this challenging period. On Bond Yields Despite a sharp rise in yields and heightened concerns on inflation, Powell maintained that "price pressures remain mostly muted and the economic outlook is highly uncertain." The chairman did not address the market’s most pressing concern; however: rallying bond yields to a level never seen before. The 10-year bond yield has risen almost 45 basis points in 2021. Besides, the Fed is committed to making $120 billion monthly bond purchases to “make substantial progress towards our goals, which we have not really been making,” he said. The Fed’s interest rate cuts and monthly bond purchases “have materially eased financial conditions and are providing substantial support to the economy,” Powell added in his opening remarks. On Inflation Rising bond yields are a critical red flag on inflation that has hit stock prices amid concerns that the Fed will raise interest rates quicker than expected. Since 2008, inflation had barely moved from Fed’s 2 percent target, even when the unemployment touched 3.5 percent – a 50-year low. Considering this, the Fed has held the lending rates and will continue to do so until inflation crosses two percent in the longer run. While, Powell said, reaching such a point will take time, timely vaccine rollout offers hope for such a scenario to become a reality. Once the average moves above 2 percent, the Fed will move to tighten its policy. “This change means that we will not tighten monetary policy solely in response to a strong labor market,” Powell said. He said, Fed has tools to deal with worst-case scenarios, and it will use every one of them if need be. His statements did curb markets fears of higher interest rates. On Asset Prices Republican senators raised concerns on the effects of the Fed’s asset purchases, a potential vaccine-driven boom, and the impact of another massive stimulus package. They fear these factors may drive the asset prices to “unsustainable levels and spark inflation.” Powell, however, reiterated that the economic recovery is far from complete and very uneven. It would need the central bank’s help for “some time” to get back to full employment levels, he added.