Jerome Powell

Investors had been hoping for a signal from Powell that the Fed might soon moderate its rate increases later this year.

He adds that the new variant could also worsen supply chain disruptions.

A large deficit will make it harder for Congress to cut taxes or boost spending when the next recession hits, Powell said.

The Fed cut short-term rates last month for the third time this year, to a range of 1.5% to 1.75%.

He says the outlook for the U.S. economy remains favorable but that it continues to face risks.