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Federal Reserve Chair Jerome Powell emphasized his view that the economy has a long way to go in the recovery and signs of prices rising won’t necessarily lead to persistently high inflation.

“Our policy is accommodative because unemployment is high and the labor market is far from maximum employment,” he told the House Financial Services Committee on Wednesday, in his second day of testimony to Congress. “It’s true that some asset prices are elevated by some measures.”

Powell pointed to the example of car prices rising because of a chip shortage and supply-chain constraints in the tech industry.

“That doesn’t necessarily lead to inflation because inflation is a process that repeats itself year over year over year,” he said, rather than a one-time surge.

In multiple questions from lawmakers about the risk of the economy overheating -- with additional government aid and continued support from the central bank -- the Fed chair reiterated his view that there’s a long way still to go before returning to pre-pandemic strength.

U.S. stocks reversed losses and turned positive as he reaffirmed his view that the economy needs help. Government bond yields jumped along with oil prices.

Inflation Concerns

His remarks were echoed by officials speaking elsewhere on Wednesday. Fed Vice Chair Richard Clarida expressed cautious optimism on the outlook but said

it would “take some time” to restore the economy to pre-pandemic levels. Govenor Lael Brainard warned

that inflation remained “very low” and the economy was still far from the Fed’s goals.

Powell acknowledged that the central bank does expect inflation to move up because of “base effects” and a surge in demand as the economy reopens from shutdowns during the virus outbreak. But he emphasized that central bank has “the tools to deal with it.”

Powell delivered his remarks as signs appear that the economy is strengthening and as optimism grows with the distribution of vaccines. Markets are also expecting further fiscal stimulus from President Joe Biden and Congress.

That prospect is setting the stage for a shift away from historically low Treasury yields and energizing the global economic trade, driving up commodities prices and inflation expectations.

Read More: Treasuries Rout Accelerates as Quants Deepen Global Debt Selloff

During the hearing, Powell voiced confidence that the Fed would succeed in lifting inflation and getting it to average 2% over time.

“I’m confident that we can and that we will, and we are committed to using our tools to achieving that,” he said. “We live in a time where there is significant disinflationary pressures around the world and where essentially all major advanced economy’s central banks have struggled to get to 2%. We believe we can do it, we believe we will do it.”

Powell said that “it may take more than three years” to reach that goal but vowed to update the Fed’s assessment on the issue every quarter. ​