NEW YORK: Ten-year Treasury yields inched higher in muted trading on Wednesday, one day after Federal Reserve Chairman Jerome Powell reaffirmed in congressional testimony the central bank's view that rising inflation will likely be temporary.

"We will not raise interest rates preemptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances," Powell said in a hearing before a U.S. House of Representatives panel.

Fed Governor Michelle Bowman and Atlanta Federal Reserve bank president Raphael Bostic echoed the central bank's sentiment that high inflation will be temporary as the economy settles back to normal after the coronavirus pandemic, though above-average inflation may last longer than originally thought.

"Temporary is going to be a little longer than we expected initially ... Rather than it being two to three months it may be six to nine months," Bostic said in an interview on National Public Radio's Morning Edition.

At their meeting last week, Fed officials surprised many market participants with a more hawkish tone and suggested that the central bank may raise interest rates as soon as 2023.

The yield curve - a measure of expectations of the economy's direction - steepened slightly. The spread between 5 and 30-year Treasury yields rose to 123.50 basis points, well above the 107.80 that it hit Monday.

The Fed's policy stance will likely not change until its Jackson Hole meeting in late August, leaving Treasury yields in a narrow trading range, analysts said.

"Absent much volatility on Fed rhetoric or even volatility in Treasuries, technicals are set to remain in focus in the interim," said Daniel Krieter, director of fixed income strategy at BMO Capital Markets.

The Treasury auctioned $61 billion in 5-year notes Wednesday afternoon with a yield of 0.904pc.

The benchmark 10-year Treasury yield rose to 1.4953pc, while shorter-term 2-year yields edged higher to 0.2641pc.

Long duration 30-year Treasury yields inched up to 2.1206pc.