June 22 (UPI) -- Federal Reserve Chairman Jerome Powell highlighted economic progress in the United States since the start of the COVID-19 pandemic but said economic threats related to the virus remain, in testimony before Congress on Tuesday.
Appearing before the House oversight and reform committee's COVID-19 panel, Powell noted that the economy has shown "sustained improvement" since he last testified before the panel in September.
"Since we last met, the economy has shown sustained improvement. Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery," he said in his opening statement.
"The sectors most adversely affected by the pandemic remain weak, but have shown improvement," he added. "Household spending is rising at a rapid pace, boosted by the ongoing reopening of the economy, fiscal support, and accommodative financial conditions. The housing sector is strong, and business investment is increasing at a solid pace."
Powell added, however, that the pandemic "continues to pose risks to the economic outlook" as progress on vaccination has limited the spread of the virus but the pace of inoculations has slowed and new strains pose a continued risk.
"The economic downturn has not fallen equally on all Americans, and those least able to shoulder the burden have been the hardest hit," he added.
"In particular, despite progress, joblessness continues to fall disproportionately on lower-wage workers in the service sector and on African Americans and Hispanics."
Powell acknowledged that the increase in inflation "have been larger than we expected" and "may turn out to be more persistent than we expected" while adding they may have been influenced by the economic recovery.
"A pretty substantial part, or perhaps all of the overshoot in inflation comes from categories that are directly affected by the re-opening of the economy such as used cars and trucks," Powell said. "Those are the things that we would look to to stop going up and ultimately to start to decline."
Powell also added that the central bank would be patient in raising interest rates.
"We will not raise interest rates preemptively because we think employment is too high, because we feared the possible onset of inflation," he said. "We will wait for actual evidence of actual inflation or other imbalances."
The fed chair also described the impact of Biden's American Rescue Plan in March, expressing a need to enact the president's American Jobs Plan and American Families Plan and present an outlook for the asset purchase program.
"We understand that our actions affect communities, families, and businesses across the country," he said. "Everything we do is in service to our public mission.
"We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery."
U.S. markets rose following Powell's testimony, with the Dow Jones Industrial Average gained 68 points, or 0.2%, while the S&P 500 gained 0.51% and the Nasdaq Composite climbed 0.79% to an intraday record.