STORY: "The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated," Powell said in prepared remarks for a hearing before the Senate Banking Committee.

Although inflation "has been moderating," since its peak last year, Powell said, "the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy."

U.S. stocks sold off, Treasury yields rose and the dollar extended a gain after Powell's comments, his first since inflation unexpectedly jumped in January and the U.S. government reported an unusually large increase in payroll jobs for that month.