Powell: Jobs Report Points to Need for Higher Rates

Federal Reserve Chairman Jerome Powell said Tuesday very strong jobs data released last week simply affirms that the central bank has some way to go on raising rates.

When it comes to Friday’s release of the January jobs data, “we didn’t expect it to be this strong,” Powell said.

While declining to say whether knowing about the vigor of the data would have affected last week’s 25 basis point rate rise, Powell said the data “shows you why this will be a process that takes a significant period of time,” when it comes to tightening monetary policy.

Powell said the Fed has some distance left to run in terms of shrinking its balance sheet.

“We haven’t put a specific target on it” when it comes to where the balance sheet run down stops, Powell said.

“It will be a couple of years” before reaching the right level of banking sector reserves, Powell said, adding selling bonds rather than allowing them to run off passively is “not something on the list of active things” officials are considering.