His speech to the Economic Club of NY sent markets soaring more than 600 points on Wednesday.
The market snapped higher shortly after noon Wednesday when Federal Reserve Chairman Jerome Powell suggested the central bank might consider a pause in its interest rate hikes next year. Last month, Mr Powell said the Fed still had a "long way" to go before it reached that equilibrium.
The possibly dovish shift in language on Wednesday came as US President Donald Trump stepped up attacks on Mr Powell, criticising the Fed's rate hikes as undercutting his economic and trade policies.
"Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy, that is, neither speeding up nor slowing down growth", Mr Powell told the Economic Club of NY.
The comments appeared to be something of a reversal from remarks Powell made in a PBS interview in early October, when he said rates were "a long way" from neutral. "From a financial stability perspective; however, today we do not see unsafe excesses in the stock market".
The U.S. central bank in 2018 has hiked rates each quarter, and is expected to tighten policy again next month.
The rate increases have gradually raised borrowing costs for consumers and businesses.
The Fed members' comments initially appeared to comfort investors.
Some have speculated that Trump might try to oust Powell, who was his hand-picked choice to lead the Fed.
Analysts read that as a suggestion that Powell intends to be more cautious about hikes in rates.
Asked about GM's layoffs and recent declines on Wall Street, Trump laid the blame on Powell.
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The chairman added that the Fed regards no major asset class as significantly inflated, "as some did, for example, in the late 1990s dot-com boom or the pre-crisis credit boom". The wording was already chosen so as not to further fuel market turmoil.
The Fed chairman said the central bank is monitoring potential vulnerabilities in the banking system to ensure its continued stability.
In an appearance earlier this month, Powell cited strong annual economic growth above 3 per cent and unemployment at a near five-decade low of 3.7 per cent.
The Fed raised its benchmark rate in March, June and in September, with the last increase putting it in a range of 2 percent to 2.25 percent.
"There is a great deal to like about this outlook", Powell said Wednesday.
The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, Powell said.
The Dow's most cyclical stocks were among the biggest gainers.
"I do think over time folks will have to get used to the idea that we can and will move at any meeting", said Powell in a question-and-answer session in Dallas.
It isn't clear that these conditions could trigger a recession on their own, he said, noting that the ratio of corporate debt to economic output didn't seem unusual.
But whether the markets are correctly assigning a new future policy path to the Fed given Powell's comments on Wednesday or not, there are two certainties when it comes to the next few years of Fed communications.
Speaking at the Economic Club of NY on November 28, Jerome Powell outlined the Fed's decision to slow or pause interest rate movements in 2019 and would continue to monitor the nation's financial stability. But some economists say three rate increases for next year are beginning to look less certain. He tried to dismiss as premature questions over whether the Fed would need to raise rates above neutral to a level aimed at slowing growth.