By Paul Kiernan 

WASHINGTON -- Federal Reserve Chairman Jerome Powell is set to take questions Thursday on the improving U.S. economic outlook and its implications for the labor market, bond yields and central-bank policies.

Mr. Powell will speak in a half-hour interview beginning at 12:05 p.m. Eastern time as part of The Wall Street Journal Jobs Summit. The appearance comes as brightening economic forecasts are pushing up long-term borrowing costs, which could complicate the Fed's efforts to keep interest rates low to support the recovery.

Market participants will be listening closely in part because they are Mr. Powell's last scheduled public remarks before the Fed's next policy meeting on March 16-17. He reaffirmed last week that the central bank will maintain ultralow interest rates and continue hefty asset purchases until "substantial further progress has been made" toward its employment and inflation goals.

Fed officials will release at the meeting their updated projections for interest rates and the economy since December, which will be of acute interest to the markets.

Steady progress in vaccinating people against Covid-19, combined with trillions of dollars of fiscal stimulus, have led forecasters to predict a quicker bounceback in economic activity than they expected last year. Many market participants also expect that a burst of spending once the economy fully reopens will push inflation above the Fed's 2% target, a situation that in the past would have prompted tighter monetary policy.

But more than a decade of weak inflation led Fed officials last year to swear off raising interest rates in anticipation of rapidly rising prices. Mr. Powell said last week that the Fed doesn't foresee raising its benchmark fed-funds rate from near zero until three conditions have been met: a range of statistics indicate that the labor market is at maximum strength, inflation has hit its 2% target and forecasters expect inflation to remain at that level or higher.

He also said the Fed's employment and inflation goals are "likely to take some time" to achieve. Inflation remains below 2% and the labor market remains well short of its pre-pandemic condition, with some 10 million fewer jobs.

The Fed cut short-term rates to near zero last year and since June has bought at least $120 billion a month of Treasury debt and mortgage-backed securities. Policy makers say the efforts have reduced borrowing costs and are providing meaningful support to the economy.

But yields on 10-year Treasury notes, which influence longer-term borrowing costs for consumers and businesses, have risen notably in recent weeks. Mr. Powell has said in recent appearances that he isn't concerned about the rise in bond yields, which he has attributed to growing optimism about the recovery.

But Fed Governor Lael Brainard said Tuesday that a sharp increase in Treasury yields last week "caught my eye."

"I am paying close attention to market developments," Ms. Brainard said in a video appearance. "I would be concerned if I saw disorderly conditions or persistent tightening and financial conditions that could slow progress towards our goal."

(END) Dow Jones Newswires

March 04, 2021 10:54 ET (15:54 GMT)