Federal Reserve's Powell says monetary policy will remain 'accommodative'

The head of the US central bank said policy would remain "accommodative" until labor market slack had been absorbed, potentially pointing to an extended period of low interest rates.

In remarks prepared for his semi-annual monetary policy report to the Senate Banking committee, Jerome Powell, also said that the Federal Reserve would continue to purchase shorter-term Treasuries and mortgage backed securities at the same pace "at least" until "substantial" progress had been made toward its goals.

"The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved," Powell said.

"We will continue to clearly communicate our assessment of progress toward our goals well in advance of any change in the pace of purchases."

Against that backdrop, as of 1608 GMT the yield on the benchmark 10-year US Treasury was flat at 1.36%.