Federal Reserve Chair Jerome Powell did not give any clear signs if the Fed would rein in rising bond yields, but maintained his earlier stance to keep the monetary policy accommodative.

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Bond yields rose further as a result, with US 10-year treasury yields climbing 7 bps from 1.47 percent to 1.54 percent after the speech. This rattled stock market investors, leading to a further wave of selling in equities. The Nasdaq Composite ended 2.1 percent lower and the S&P slumped 1.3 percent. But Fed officials don’t appear to be too worried.

Powell said the increase in yields was “notable” but was neither a “disorderly” move or one that demanded an intervention by the Fed. Currently, the Fed is buying $120 billion of Treasury and mortgage-backed securities every month .

Instead of allaying market worries, he reiterated his past statements and said he didn’t expect inflationary pressures to be strong enough to raise interest rates. He said he was mindful of rising bond yields, but added that the economy was a long way from reaching the Fed’s goals of maximum employment and inflation averaging 2 percent. A 2 percent inflation rate signifies a healthy economy and gives Fed the room to cut rates during crises.

He said, “there’s a lot of ground to cover before we get to thinking about increasing rates.” Even if the economy sees a “transitory increase in inflation”, we “will be patient” before we hike the interest rates.

With COVID-19 vaccines rolling out and the government fiscal taps open “there is good reason to think we will make more progress soon,” he added, but “it will take substantial time,” even if does happen this year.

Fed aims to keep its interest rates near zero and continue its monthly bond-buying program up and running until it sees a low unemployment rate inclusive across income, gender, and racial lines.