In his prepared remarks, Powell provided a mostly positive picture of the U.S. economy -- which was dented but not significantly damaged by slower global growth and international trade disputes in 2019.

“Economic activity increased at a moderate pace and the labor market strengthened further, as the economy appeared resilient to the global headwinds that had intensified last summer,” he said.

His remarks followed data released last week showing U.S. employers added a better-than-expected 225,000 new jobs in January.

Powell said the central bank had been successful in containing a sudden September spike in overnight funding rates that briefly pushed the Fed’s benchmark lending rate to stray outside its target range.

Repo Operations

The central bank has conducted emergency lending into the market for repurchase agreements and, in October, began purchasing $60 billion a month in Treasury bills. The latter move has boosted bank reserves, allowing banks to feed money into the repo market in place of the Fed.

“As our bill purchases continue to build reserves toward levels that maintain ample conditions, we intend to gradually transition away from the active use of repo operations,” he said. “We intend to slow our purchases to a pace that will allow our balance sheet to grow in line with trend demand for our liabilities.”

Powell repeated his concerns over longer-term issues holding back growth in the U.S. economy.

“Finding ways to boost labor force participation and productivity growth would benefit Americans and should remain a national priority,” he said.

Federal Budget