With the overnight federal funds rate stuck near zero for years, he said the management of expectations has been important in allowing investors to buy and sell bonds with confidence that rates would not unexpectedly increase.
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That, for example, has lowered the premium charged for longer-term loans, and helped tamp down volatility as well, Powell said.
"Forward guidance has generally been effective in providing support for the economy at a time when the federal funds rate has been pinned at its effective lower bound," said Powell, who is awaiting Senate confirmation to a new 14-year term on the Fed board.
Powell added that markets were "well aligned" with the guidance the central bank has offered about the likelihood that its asset-buying programwill be stopped by the end of the year.