In that appearance Powell emphasized the Fed's flexibility and patience in evaluating data, easing expectations of steady rate hikes in a message amplified by a half dozen other Fed officials in recent days.
"We're in a place where we can be patient and flexible and wait and see what does evolve, and I think for the meantime we're waiting and watching", Powell said in a question-and-answer session Thursday at the Economic Club of Washington, D.C.
"In the short term if government shutdowns don't last very long they've typically not left much of a mark on the economy", Mr Powell said.
On Thursday, Powell said he hasn't seen anything to indicate that the risk of a recession is elevated.
During a lunchtime appearance at the Economic Club of Washington, D.C., Powell sounded optimistic about the US economy but cautioned that it was unclear whether slowdowns in Asia and Europe could become a drag on the U.S. He said the Fed's aim was to return the balance sheet to a "more normal level" but didn't specify what that level will be.
"The long-run fiscal, nonsustainability of the USA federal government isn't really something that plays into the medium term that is relevant for our policy decisions", Powell added.
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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 Fed's communications - and a Bloomberg News report that President Donald Trump had discussed firing Powell - helping bring on the worst December for stocks since the Great Depression. The principal worry is global growth, he said in questioning by David Rubenstein, the co-founder of private-equity firm Carlyle Group, where Powell was previously a partner.
Powell said that he had never met Trump before he was interviewed by the president in late 2017 for the Fed chairman's job.
Asked if the Fed still plans two rate hikes, Powell emphasized there is not on a set course. The Fed has projected two more rate hikes, but Powell is now signaling the Fed will be "patient" on any further hikes.
He agreed with the prevailing view of the United States economy slowing to around 2.25-2.5 per cent this year, with unemployment holding around the current 3.9 per cent.
After four rate hikes a year ago, the Fed would be "bordering on going too far and possibly tipping the economy into recession" if rates go higher, Bullard said, adding that he would be willing to cut interest rates if needed.
The Fed chief was also asked about the partial USA government shutdown.