(Reuters) - The U.S. Federal Reserve is in no rush to cut its short-term interest rate again given an economy that is "strong overall," with low unemployment and inflation that remains above the Fed's 2% target, Fed Chair Jerome Powell said in opening remarks prepared for delivery at a Senate Banking Committee hearing.

"The economy is strong overall and has made significant progress toward our goals over the past two years," Powell said, with a 4% jobless rate considered around the level of full employment, and inflation lower though still more than half a percentage point above the Fed's target.

"We know that reducing policy restraint too fast or too much could hinder progress on inflation," Powell said, reiterating language used after the Fed at its January meeting held interest rates steady.

Powell's Senate testimony is the first of two days of hearings on Capitol Hill that come as the Fed grapples with how policies enacted and expected from President Donald Trump impact an economy that, by many metrics, is already performing well.

Powell declined to comment on the Trump administration's tariff policies but acknowledged there have been issues on the trade front.

MARKET REACTION:

STOCKS: The S&P 500 was off 0.15%, a bit less than before Powell's comments started coming out

BONDS: The yield on the benchmark U.S. 10-year note ticked up to 4.533%. The 2-year note yield was little changed 4.294%

FOREX: The dollar index was off 0.28%

COMMENTS:

HELEN GIVEN, FX TRADER, MONEX USA, WASHINGTON

"It seems that traders are taking his remarks right now as very, very cautious."

"He's trying to just urge caution in all markets and across all sectors right now... We've seen a lot of volatility come off of headlines in the last few days. It seems like he's trying to urge people to not trade off those headlines, to not make moves off those headlines and wait and see what actually happens."

"We've seen a lot of volatility come off of tariff headlines in the last two weeks. But what we're seeing now is that those headlines and those announcements are not necessarily an indication that these tariffs are actually going to be levied, at least not at the time that we think that they might be. So, everyone is just in a wait and see mode. No one really wants to be caught on the wrong side of the market at the moment... The dollar is taking some small losses, but nothing crazy. And volatility is not nearly as high as it has been today. Things are fairly calm."

BRADLEY SAUNDERS, NORTH AMERICA ECONOMIST, CAPITAL ECONOMICS (by email)

"While there was no explicit mention of tariffs in Powell's statement - nor in the communication surrounding last month's decision - the erratic policymaking of President Trump is sure to be playing on the minds of policymakers as they contemplate their next steps," said Bradley Saunders, North America economist at Capital Economics.

(Compiled by the Global Finance & Markets Breaking News team)