Federal Reserve Chairman Jerome Powell has promised to "strike a balance" between the risk of a fast accelerating economy and the need to keep growth on track.
On Tuesday, the central bank committed to sticking with gradual interest rate increases despite the added stimulus of tax cuts and government spending, with Fed policymakers anticipating three rate increases during 2018.
Powell said in his first monetary policy testimony as Fed chief "Some of the headwinds the U.S. economy faced in previous years have turned into tailwinds. Inflation remains below our 2 percent longer-run objective. Further gradual rate increases in the federal funds rate will best promote attainment of both of our objectives".
The testimony sent the signals that the Fed has no intentions to shift to a faster pace of rate increases following the massive tax overhaul and government spending plan launched by the Trump administration and led to the stock markets slipping at market close on Tuesday.
The Fed is expected to approve the first rate hike of 2018 at the next policy meeting in March, when it will also provide updated economic projections and Powell will hold his first press conference.
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