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"We didn't expect it to be this strong," Powell said, but it "shows why we think this will be a process that takes quite a bit of time." It has just confounded all sorts of attempts to predict," Powell said, noting that wage growth has slowed even with continued strong job gains. Officials raised the target interest rate a quarter point to a range between 4.5% and 4.75% at that session, and said in the latest policy statement that "ongoing increases" would be needed. 1 2 3 4 5As of December, the Fed's preferred measure of inflation was increasing at a 5% annual rate, still more than double the Fed's target. While Powell said he expected "significant declines in inflation" this year, the U.S. economy was still "in the beginning of getting that down."

"It tells me that so far, we're not seeing much of an imprint ... on the labor market," Kashkari said. Bond yields have rocketed higher and interest rate futures markets now are squarely priced for a federal funds rate reaching at least 5.1%. LABOR MARKET CONCERNSOn Monday, Atlanta Fed President Raphael Bostic was one of those who said the central bank may need to lift borrowing costs higher than previously anticipated given the job gains. "We've seen no progress so far, virtually no progress in core services ex housing, and that's very tied to the labor market." Reporting by Lindsay Dunsmuir; Editing by Andrew Heavens, Chizu Nomiyama, Andrea Ricci and Paul SimaoOur Standards: The Thomson Reuters Trust Principles.

But "we should 'stick to our knitting' and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities," Powell said. "Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence." "Decisions about policies to directly address climate change should be made by the elected branches of government and thus reflect the public's will as expressed through elections," he told the forum in Stockholm. Powell's comments, particularly about climate change, are not new. When it comes to inflation, however, Powell said it was critical the Fed retain the ability to manage as it sees fit - raising interest rates to control inflation even if that means slower growth and higher unemployment.

STOCKHOLM, Jan 10 (Reuters) - The Federal Reserve's independence from political influence is central to its ability to battle inflation, but requires it stay out of issues like climate change that are beyond its congressionally-established mandate, Fed Chair Jerome Powell said on Tuesday. "Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy. "Taking on new goals, however worthy, without a clear statutory mandate would undermine the case for our independence." Powell's position on the issue stands in contrast to major central banks in Europe that have integrated green economy efforts into their policymaking. But it also recognizes the political realities in the United States where opinion among elected officials is more divided.

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