JACKSON HOLE • The Federal Reserve's steady interest rate hikes are the best way to protect the US economic recovery and keep job growth as strong as possible and inflation under control, Fed chairman Jerome Powell said yesterday in a high-profile endorsement of the central bank's current approach to policy.

Speaking just days after President Donald Trump criticised the US central bank's rate hikes, Mr Powell used an annual research symposium here to "explain today why my colleagues and I believe that this gradual process... remains appropriate".

"The economy is strong. Inflation is near our 2 per cent objective, and most people who want a job are finding one... If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate."

Mr Powell's comments were not a direct response to Mr Trump's criticism that he is "not thrilled" with the Fed raising rates as he is trying to stimulate economic growth.

However, the Kansas City Fed's annual conference is among the central bank's higher-profile annual events, drawing international media attention and an audience including representatives of other nations' central banks.

The conference has taken on a mystique since past Fed chairmen and other central bankers have occasionally used the event to signal a change in policy.

But Mr Powell's speech focused squarely on lessons learnt in past economic eras and how to apply them to the current situation, which he called "challenging". He said that Fed mistakes of the past, such as inaccurate estimation of full employment that allowed inflation to take off in the 1970s, mean that the central bank today should not assume its current estimates of those economic variables are precise.

The Fed "has been navigating between the shoals of overheating and premature tightening with only a hazy view of what seem to be shifting navigational guides", Mr Powell said.

The Fed is expected to raise rates next month, perhaps again in December, and continue what it refers to as "normalisation" into the next year.

REUTERS, AGENCE FRANCE-PRESSE