WASHINGTON—Federal Reserve Chairman Jerome Powell indicated Wednesday that he isn’t concerned about a recent rise in long-term bond yields, saying they appear to reflect growing optimism about the economy’s prospects.
“It seems that rates have responded to news about vaccination and ultimately about growth,” Mr. Powell said in a hearing before the Senate Banking Committee. “And that has been an orderly process.”
The yield on 10-year Treasury notes stood at 1.64% on Wednesday, up from 0.92% at the beginning of the year but down from a peak last week of 1.76%. Some economists and market participants have worried that a rapid or sustained climb in rates could weigh on the economy by making it more expensive for consumers and businesses to borrow.
Mr. Powell on Wednesday said he “would be concerned if it were not an orderly process or if conditions were to tighten to the point where they might threaten our recovery.” But he reiterated the Fed’s view that the recent increase has come from “extraordinarily low levels…back up toward a level that we’re more likely to see.”
Mr. Powell and Treasury Secretary Janet Yellen appeared before the panel for their second day of joint testimony to Congress about the government’s efforts to restore the economy to health in the midst of the Covid-19 pandemic.
