Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell agreed on Tuesday that increased valuations of assets in the pockets of the markets were not yet a cause for concern.

Both spoke to the House Financial Services Committee about their belief in the stability of the financial sector as the U.S. economy recovers from the Covid-19 pandemic.

But Rep. Jim Himes, D-Conn., Asked the couple if they were even concerned about possible market turmoil once trillion dollar fiscal stimulus efforts wear off and the Fed begins to curb its loose monetary policy.

Yellen, the first woman to head the finance department, answered first.

“I would say that while historical metrics add value to assets, there is also a belief that with rapidly advancing vaccinations, the economy can get back on track,” she said.

“I think that in an environment with high asset prices, it is important that regulators make sure that the financial sector is resilient and that markets are functioning well,” said Yellen, “and that financial institutions manage their markets appropriately for risk.”

Janet Yellen, candidate for Treasury Secretary

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74-year-old Yellen spoke at length about President Joe Biden’s successful adoption of the $ 1.9 trillion Covid-19 aid package known as the American Rescue Plan and about the government’s efforts to provide further impetus in the coming months .

The Treasury Secretary, who was a strong supporter of the coronavirus relief act, said the legislation will quickly provide funding for millions of Americans struggling to pay rent, buy groceries and other living expenses when workers try to get back to enter the labor market the 2020 recession.

Although she had avoided going into details about the Biden government’s tax plans, Yellen admitted that she expects the White House to eventually come up with ways to generate revenue to pay for expensive agenda items, including an upcoming infrastructure plan.

To date, federal lawmakers have approved $ 6 trillion in tax cuts, loans, grants and subsidies in the aftermath of the pandemic and coronavirus economic crisis, according to the Federal Responsible Budget Committee, a fiscal oversight group.

Himes noted that the current flow of liquidity, encouraged by fiscal and monetary policies, appears to have resulted in some frothy valuations of assets in the market. He quipped that “everyone and their brother have a SPAC,” a joke about how easy it seems for investors to join forces to acquire private companies through a special purpose vehicle.

While Fed Chairman Powell, 68, admitted that some parts of the market look rich, he said the country’s largest banks continue to be cashless and otherwise look healthy.

“We are always carefully reviewing financial stability. We have a four-pillar framework,” added Powell. “If you look at these, the evidence is mixed. You could say that some asset prices are a little high, but the banking system is highly capitalized.”

Wall Street is increasingly concerned that the Fed will soon be signaling that it will slow or “rejuvenate” its purchases of US Treasuries and mortgage-backed securities. This purchase, valued at billions of dollars each month, is being used by the Fed to boost the US economy by keeping the financial system flush with cash.

The Fed’s balance sheet, which only fell below $ 4 trillion in the summer of 2019, has soared to nearly $ 7.7 trillion, according to the central bank’s website.

With signs of a recovery in the US economy in the form of improved employment data, expectations for strong GDP growth, and predictions of burgeoning inflation, investors believe that the Fed’s ability to broadcast and make incremental changes is negligible will be crucial.

As for further development, we announced that we will begin reducing our asset purchases as we see significant further progress towards our goals of ‘full employment and inflation near the Fed’s 2% target,’ said Powell that comes, we’ll communicate long before the time of actual rejuvenation. “