In his remarks before the Economic Club of Washington, Powell described the economy as strong at the end of past year, with the lowest unemployment levels in a half-century and solid gains in wages. It would be up to the Fed to decide how to balance those worries with the signals of a strong economy. Big picture: "they don't have that much further to go and they don't have to go there fast", said Robert Tipp, chief investment strategist with PGIM Fixed Income in Newark, New Jersey.
How do increased interest rates impact you? "We don't get distracted".
Powell's second appearance in less than a week generated a subdued response in financial markets, a sign he may have found his footing in how to describe central bank policy without surprising investors. Trump tapped Powell for the post after deciding not to offer then Fed-Chairman Janet Powell a second term.
President Donald Trump has been a vocal critic of Powell.
Trump stepped up his criticism of the Fed's string of rate hikes a year ago after the market started falling sharply in October.
The speech reinforces comments by other policy makers this month that the Fed is likely to keep interest rates on hold through at least March following four hikes in 2018.
He also said that the Fed had no preset path for rate hikes and would be "patient" when determining whether to hike interest rates further in response to strong US growth that risks sparking inflation, or to pause rate hikes to account for a global economic slowdown. "The US economy is solid".
United States stocks initially turned lower after Powell said the central bank is sticking with its process of shrinking its balance sheet to a more normal level, which removes stimulus put into place to revive the economy following the financial crisis and recession a decade ago. He also made clear that applies to the Fed's approach to its $4.1 trillion balance sheet, which the central bank is now reducing by a maximum of $50 billion per month. However, many economists believe the Fed may end up raising rates only once in 2019, and that solo rate hike may not occur until the middle of the year.
Powell noted that the Fed's holdings were around $1 trillion before the 2008 crisis.
"If we find that the ongoing program of balance sheet normalization or any other aspect of normalization no longer promotes the achievement of our dual-mandate goals, we will not hesitate to make changes, " Clarida said.
At the same time, Powell acknowledged that financial markets are expressing concern about risks.
Still, Powell's comments and those of other officials "are developing a new narrative".