Speaking just days after President Donald Trump criticized the USA central bank's rate hikes, Powell used an annual research symposium here to "explain today why my colleagues and I believe that this gradual process.remains appropriate".
Fed funds and eurodollar futures prices indicate financial markets expect only one rate hike next year, leaving rates in a range of 2.50 percent to 2.75 percent by mid-2019, up from the Fed's current target of 1.75 percent to 2.00 percent.
MR JEROME POWELL, Fed chairman, on the central bank's approach to rates.
The Fed has been coming to Jackson Hole since 1981. A slower pace of rate increases would be meant to encourage continued borrowing and spending by companies and individuals to drive economic growth.
By Craig Torres Jerome Powell laid out a doctrine of basing monetary policy as much on how the economy performs in reality as on the prescriptions of academic models as his Federal Reserve tries to extend a almost decade-long expansion.
Powell characterised the United States economy as very healthy and said the Fed expects growth and hiring to continue.
Mazen Issa, senior FX strategist at TD Securities in NY, said Powell's remarks built on a stance seen in the minutes of the Fed's latest policy meeting released on Wednesday.
"I believe in the Fed doing what's good for the country", he said. So, as of now, the Fed has little reason to push rates above the neutral territory and/or hike rates at a faster pace. His speech reflected that, brimming with criticism of reliance on economic models that gauge current economic conditions based on assumptions about the "natural" or "neutral" rate of unemployment, interest rate, inflation, or economic growth.
Fed Chairman Jerome Powell was to give the conference's keynote address yesterday morning, with investors focused on what he might signal about the future path of rate hikes in light of Trump's comments and economic developments.
That broke a tradition that the White House should refrain from attacks on the Fed because such criticism can shake the confidence of financial markets that the Fed is committed to keeping inflation under control without regard to political considerations. The bank made a total of seven rate hikes since December 2015, three coming a year ago.
In June, the Fed predicted a total of four hikes this year, up from an earlier estimate of three. But inflation has just risen to the Fed's 2 percent target range after years of low levels, and does not appear to be accelerating.
Increasing consensus at the Federal Reserve on the need to continue raising USA interest rates was on display at the start of a global central bankers meeting here, as the longstanding distinction between so-called policy hawks, centrists and doves blurs in the face of falling unemployment.
Trump contributed to the dollar's weakness during the last hour of trading on Monday by criticizing the Fed.
Analysts said growing U.S. political uncertainty, reinforced by the criminal convictions of two of Trump's ex-advisors this week, was keeping the dollar under pressure, despite the United States embarking on greater monetary tightening than elsewhere.