WASHINGTON — Jerome H. Powell, the new chairman of the Federal Reserve, said in his public debut on Tuesday that his expectations for domestic economic growth have increased since the beginning of the year, citing the passage of the $1.5 trillion tax cut and stronger global growth.

In testimony before Congress, Mr. Powell said that the Fed planned to continue increasing its benchmark interest rate only gradually, as it did under his predecessor, Janet L. Yellen. But investors responded to his optimism as an indication the Fed may be compelled to move more quickly. As Mr. Powell testified, stocks fell, the dollar strengthened and bond yields rose.

Mr. Powell told the House Financial Services Committee that headwinds once holding back the American economy had now turned into tailwinds.

“My personal outlook for the economy has strengthened since December,” Mr. Powell said.

Yet he struck a careful tone. Inflation has remained sluggish for nearly a decade, and Mr. Powell said the Fed “will continue to strike a balance between avoiding an overheated economy” and allowing inflation to tick up toward the Fed’s target of a 2 percent annual pace.