Federal Reserve Chair Janet Yellen called for moderation in monetary policy in a major speech on Friday as the economy continued to show signs of a slow but steady recovery.
Speaking from Jackson Hole, Wyoming, the central banker hailed a falling unemployment rate and improving payroll figures but held back from calling it significant enough process to notch up still-low interest rates.
"These developments are encouraging, but it speaks to the depth of the damage that, five years after the end of the recession, the labor market has yet to fully recover," Yellen said.
Employment was high on the agenda as something the Fed chair indicated would determine whether the central bank decides to move on interest rates in the near future.
She said the Federal Open Market Committee plans to continue easing asset purchases toward suspension in October but only with a "wide range" of measurable information available that showed stability in the economy.
Under the larger Federal Reserve, the influential Federal Open Market Committee helms open-market activities like the purchase and sale of Treasury securities.
Recent minutes showed the committee continues to see inflation running "persistently below 2 percent," enough to back measures like the widely anticipated hike in federal interest rates, kept artificially low since the Great Recession.
The committee pledged in July that it would add mortgage-backed security holdings at $10 billion per month, a notch down from $15 billion per month.
Longer-term Treasuries would meanwhile roll in at $15 billion each month rather than $20 billion, with the committee expecting that increased security holdings will exert "downward pressure" on interest rates and buttress mortgage markets.
Paul Dales, a senior U.S. economist with Capital Economics, said Yellen's address on Friday was far from a seismic event in how she felt about interest rates.
If the committee's July minutes "suggested that the Fed had taken two steps closer to raising interest rates, then today's speech ... could be interpreted as it taking one step back," he said in analysis offered on Friday.
His firm projected that the simple arithmetic of votes from other committee members would likely outnumber and compel the Fed chair to hike interest rates in March next year.
"Put simply, she continues to believe there is more slack in the [labor] market than the unemployment rate suggests," Dales added.