(Adds quotes, context)
By Marc Jones and Francesco Canepa
LONDON, June 6 Federal Reserve Governor
Jerome Powell said on Friday that he wanted to see signs that
the U.S. economy was tightening up before before interest rates
could be raised.
While acknowledging that employment in the United States had
rebounded, Powell highlighted "significant" slack, referring to
unemployed or underutilised workers.
The Fed hopes to end its stimulus programme for the U.S.
economy by the end of the year, clearing the way for it to
eventually raise interest rates.
"I'm looking for some sign the economy is getting tight
before we can start thinking about raising rates," Powell said
at an event in London.
Powell added there was a "significant amount of slack in the
labour market" in the United States at present.
In brief prepared remarks, Powell said the Fed's evolving
statements about the future path for rates have played an
important role in shaping market expectations about U.S.
With the overnight federal funds rate stuck near zero for
years, he said the management of expectations has been important
in allowing investors to buy and sell bonds with confidence that
rates would not unexpectedly increase.
That, for example, has lowered the premium charged for
longer-term loans, and helped tamp down volatility as well,
"Forward guidance has generally been effective in providing
support for the economy at a time when the federal funds rate
has been pinned at its effective lower bound," said Powell, who
is awaiting Senate confirmation to a new 14-year term on the Fed
Powell added that markets were "well aligned" with the
guidance the central bank has offered about the likelihood that
its asset-buying programme will be stopped by the end of the
(Additional reporting by Howard Schneider in Washington;
Editing by Hugh Lawson)