US stocks rallied on Tuesday, after Fed Chairman Jerome Powell reiterated his opinion that inflation is temporary. He said that prices will eventually decline, and assured that the situation in 1970 will not happen.

S&P 500 posted a 0.5% gain on this news.

Art Hogan, chief strategist at National Securities, also said US inflation is higher than expected, but pointed out that markets have now calmed down.

Meanwhile, New York Fed President John Williams affirmed that discussions on raising interest rates are still "in the distant future," while his colleague, Cleveland Fed President Loretta Mester said very low rates over a long period of time and unconventional policy instruments such as bond purchases could lead to too much risk and problems with financial stability.

Other key events for this week are:

- report on US home sales and current account balance (Wednesday);

- EIA report on oil reserves (Wednesday);

- policy meeting of the Bank of England (Thursday);

- results of stress tests of largest US banks (Thursday).