Federal Reserve Chairman Jerome Powell played down concerns about recent market volatility, arguing Tuesday that the dramatic swings do not weigh heavily on his outlook for the economy and maintaining his expectation for further gradual increases in interest rates.

In Capitol Hill testimony, Powell emphasized that the job market remains robust, consumer spending is solid and wage growth is accelerating. He also highlighted gains in U.S. exports and stimulative fiscal policy as new "tailwinds" for the economy.

"After easing substantially during 2017, financial conditions in the United States have reversed some of that easing," he said in prepared remarks. "At this point, we do not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation. Indeed, the economic outlook remains strong."

Powell's appearance before the House Financial Services committee was his first as the powerful chairman of the world's most influential central bank. The Fed has been aiming to boost inflation to 2 percent, but the recent pickup in monthly readings has spooked some investors who worry the central bank might overshoot its target.

Instead, Powell's remarks suggested the firmer data give Fed officials confidence they will actually hit a goal that has long proved elusive. He characterized inflation as "low and stable."

"Despite the recent volatility, financial conditions remain accommodative. At the same time, inflation remains below our 2 percent longer-run objective. In the FOMC's view, further gradual increases in the federal funds rate will best promote attainment of both of our objectives."

In his testimony, Powell described the risks to the economic outlook as "roughly balanced" but noted that officials will monitor inflation closely. He also said he expects wages to increase at a faster pace.

Powell also reiterated the Fed's expectation that "further gradual increases" in the federal funds rate would likely be warranted, a phrase officials are using to emphasize their growing conviction in that projection without boxing them in to a certain number of hikes. Powell also said the shrinking of the Fed's balance sheet is proceeding smoothly.

—With reporting by CNBC's Jeff Cox.