Economists and investors have been scratching their heads this week over signals from the Federal Reserve, which left the future of USA monetary policy open to broadly divergent interpretations. The minutes show support for a fourth hike this year if the labour market and inflation meet or exceed expectations.
His remarks were a departure from comments he made at the beginning of October, stating the interest rates were a "long way from neutral".
"Powell's dovish pivot reduces nagging concerns about vigorous interest rate hikes while providing the market with one of the best holiday gifts, a significant bounce in global equity markets", said Stephen Innes, head of Asia-Pacific trade at OANDA.
The central bank's benchmark federal funds rate influences interest rates across the economy, including the prime rate, which is used by banks to set rates for credit cards and other methods of borrowing.
Neither Clarida nor Powell said definitively whether rate hikes should stop at neutral, and each stressed that level was very hard to estimate.
In prepared remarks at the Economic Club of New York, Powell said, the central bank's benchmark interest rate is "just below" neutral.
"We also know that the economic effects of our gradual rate increases are uncertain and may take a year or more to be fully realised", he said, adding that there was "no preset policy path".
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Speaking to the Economic Club of NY, the chairman also suggested that interest rates appear to be just below the level the Fed calls "neutral", where they are thought to neither stimulate growth nor impede it.
US President Donald Trump has repeatedly slammed the Fed chair for raising rates too often.
Federal Reserve officials signaled they're adopting a more flexible approach in their gradual interest-rate increases after a likely December hike, as they try to sustain a USA expansion that may become the longest on record next year.
"The hint from the Fed that they are closer to ending the current rate hike cycle caught the markets somewhat by surprise". Trump tapped Powell past year to be Fed chairman after he decided against giving Janet Yellen a second term.
The Fed has raised rates three times this year and has been saying the economy is in strong shape.
In an interview this week with The Washington Post, Trump said he was not happy with Powell's support for further rate hikes.
And, when presidents do criticise the Fed, they only tend to do it once they have left office.