WASHINGTON (AP) — Federal Reserve Chair Jerome Powell underscored the U.S. economic system’s ongoing weak spot Tuesday in remarks that steered that the Fed sees no want to change its ultra-low rate of interest insurance policies anytime quickly.

“The financial restoration stays uneven and much from full, and the trail forward is extremely unsure,” Powell stated in written testimony to the Senate Banking Committee.

Powell’s feedback are in distinction to the growing optimism amongst many analysts that the economic system will develop quickly later this 12 months. That outlook has additionally raised issues a few potential surge in inflation and fueled a pointy enhance in longer-term rates of interest this 12 months. Most economists say they assume the Fed’s continued low charges, additional authorities monetary support and progress in combating the viral pandemic might create a mini-economic increase as quickly as this summer season.

Powell acknowledged the potential for a more healthy economic system. However he harassed the non-public hardships attributable to the pandemic, particularly for unemployed People.

“As with total financial exercise, the tempo of enchancment within the labor market has slowed,” Powell stated. “Though there was a lot progress within the labor market because the spring, thousands and thousands of People stay out of labor.”

The monetary markets are extra centered for the second on the potential for fast development. On Monday, the tech-heavy Nasdaq index tumbled a steep 2.5% because the yield on the 10-year Treasury notice surged to just about 1.37%. At the beginning of the 12 months, the 10-year yield was beneath 1%.

Rising rates of interest usually replicate optimism that the economic system is poised to increase extra rapidly, which may speed up inflation. However they will additionally weaken development, particularly if the Fed had been to reply to rising inflation by elevating its benchmark fee extra rapidly than markets anticipate.

Powell didn’t point out the sharp enhance in longer-term charges this 12 months or the inventory market’s run-up to frothy ranges in his written testimony.

Powell is testifying earlier than the Senate Banking Committee within the first of two days of semiannual testimony to Congress that’s required by regulation. On Wednesday, he’ll testify to the Home Monetary Companies Committee.