The Federal Reserve chair, Jerome Powell, has said that more interest rates rise will be needed to cool inflation and the red-hot US jobs market.
"We think we are going to need to do further rate increases," Powell said on Tuesday at the Economic Club of Washington. "The labor market is extraordinarily strong."
The Fed chair's comments came hours ahead of Joe Biden's State of Union address to Congress at which he is predicted to tout his administration's economic record, including strong job growth.
The US added 517,000 new jobs in January - far higher than expected and a sign of the continuing strength of the jobs market. The report came two days after the Fed announced another quarter-point increase in its benchmark interest rate, its eighth consecutive rate increase as the central bank fights to tame inflation.
"The disinflationary process, the process of getting inflation down, has begun and it's begun in the goods sector," Powell said in Washington. "But it has a long way to go. These are the very early stages of disinflation."
Reacting to the stronger-than-expected employment report, analysts now expect interest rates to rise above 5% to ease wage pressure in the labor market and begin to cool inflation to the Fed's 2% target. In December inflation stood at 6.5%.
While some have begun to declare victory over inflation, Powell said last week that officials need "substantially more evidence" to be confident that inflation is heading downward.
"The reality is we're going to react to the data," Powell said on Tuesday. "So if we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than is priced in."