The stock market, which had been down in early trading, declined further after Ms. Yellen’s initial comments. Shares of some high-growth technology companies — which are especially sensitive to the risk of higher interest rates — were hard hit and weighed on the market. But the blue chip index cut those losses in half in the afternoon, ending the trading day down just 0.7 percent. While the Fed is watching for signs of inflation, Mr. Powell and other Fed officials have said they believe any price spikes will be temporary. “It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” Ms. Yellen said when asked if the economy could handle the kind of robust spending that the Biden administration is proposing.

Source: New York Times May 04, 2021 16:19 UTC