Federal Reserve Chairman Jerome Powell gestures while he testifies to the House Financial Services Committee, Tuesday, Feb. 27, 2018, in Washington. (AP Photo/Jacquelyn Martin)

Federal Reserve Chairman Jerome Powell gestures while he testifies to the House Financial Services Committee, Tuesday, Feb. 27, 2018, in Washington. (AP Photo/Jacquelyn Martin)

WASHINGTON (AP) — New Federal Reserve Chairman Jerome Powell delivered a message Tuesday that wasn’t quite what Wall Street had expected: The U.S. economy is doing well, maybe even better than he thought late last year.

Powell emphasized in his first Congressional testimony that the central bank plans to raise rates gradually. Nonetheless, his growing optimism about the economy rattled investors. Treasury yields climbed and stocks fell amid fresh speculation that the Fed would accelerate the pace of hikes in its benchmark policy rate this year. The Dow Jones industrial average closed down 299 points.

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The Fed raised rates three times in 2017 and had projected in December that it would raise rates another three times this year. However, many private economists said they now expected the Fed will boost rates four times this year rather than three.

“My personal outlook for the economy has strengthened since December,” Powell said when asked whether the Fed might boost its projection for rate hikes from three to four when it updates its outlook next month.

Powell would not say whether the Fed’s projection for rate hikes would change. But he noted a number of ways that the economic outlook has improved since December, including stronger data on growth and inflation, the passage of a $1.5 trillion tax cut in late December and an increase in government spending in a January budget deal.

Powell said that he would not speculate on whether the number of hikes would be boosted since any change will depend on the individual forecasts of each of the 15 members of the Fed’s policy committee.

But private economists said they saw Powell’s comments as a strong signal that the Fed will be raising its rate forecast at its next meeting in March.

Powell’s comments came as he delivered the Fed’s semi-annual monetary report to the House Financial Committee. He will appear before the Senate Banking Committee on Thursday.

His reception before the House panel stood in marked contrast to how the committee interacted with Janet Yellen. Republicans often challenged Yellen, a Democrat, during exchanges in which she was often interrupted by male lawmakers who dismissed her answers on a wide variety of topics.

A frequent flash-point was Yellen’s objection to GOP-sponsored legislation to limit the Fed’s independence by requiring the Fed to follow a specific monetary rule in setting interest-rate policies.

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Powell, a Republican tapped by President Donald Trump in November when the president decided against giving Yellen a second term, expressed support in his opening statement for using various monetary formulas to help guide setting interest rates.

During a hearing that lasted more than three hours, Powell enjoyed a far more placid exchange with the GOP-controlled committee. A number of Democrats, however, sought to force Powell to criticize a range of Trump economic policies, from tax cuts the Democrats claimed would worsen income inequality, to huge budget deficits that are expected to make deficits climb toward $1 trillion annually.

Powell, however, was adept at staying out of political controversies, frequently saying that the subjects he was being asked about were in the realm of policies controlled by Congress and the administration and not the Federal Reserve.

In his statement, Powell praised Yellen for the important contributions she made during her four years as the first woman to lead the Fed. He said the two had worked together to ensure “a smooth leadership transition and provide for continuity in monetary policy.”

Referring to the wild swings in the stock market that occurred earlier this month, Powell said the Fed does “not see these developments as weighing heavily on the outlook for economic activity, the labor market and inflation.”

Powell, who took office on Feb. 5, had been an investment banker before joining the Fed board in 2012.

Even with three hikes last year, the Fed’s policy rate remains at a still-low 1.25 percent to 1.50 percent. But various market rates, including home mortgage rates, have begun rising in anticipation of further Fed rate increases.

In his comments, Powell did not express worries that the economy was starting to overheat, stressing instead a number of developments showing economic strength.

“The robust job market should continue to support growth in household incomes and consumer spending,” Powell said.

Some economists have raised concerns that recent moves by the Trump administration and Congress to boost economic growth through tax cuts and spending increases could raise the risks of overheating and inflation.

But Powell said that the government’s fiscal policy was now “more stimulative,” which he said would help to boost chronically low inflation in recent years. He said that the Fed expected inflation to move up this year and then stabilize around the Fed’s 2 percent target.