Powell said the current conditions justify the gradual approach.
"The economy is strong, inflation is close to our 2 percent target, and most people who want a job find one," he said. "My colleagues and I are carefully monitoring in-depth data, and we are laying down a policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent." Much of the speech was given a history of Fed action from the period of inflation in the 1970s. Policy makers have learned over the years to be vigilant in keeping inflation and unemployment at a healthy level.
As for inflation, Powell said the Fed has learned that inflation sometimes appears on the financial markets before general price pressures. History has shown that "spending too little money is more than doing too much" when trying to control inflation.
Should inflation expectations be defused in both directions, the Fed would "do anything"
In a wider sense, Powell said that the current conditions suggest no problem with inflation expectations. The Fed expects 2 percent to be healthy, and the latest data suggest that the economy is at or around this level. Powell, however, said he did not see significantly higher inflation. in an economy that he thinks performs well.
"With solid household and business confidence, healthy employment levels, rising incomes, and fiscal stimulus, there is reason to believe that this strong performance will continue," he said.
The US Federal Reserve is also in the News, as President Donald Trump has criticized it for raising interest rates further.
Powell did not mention the President's remarks in his speech, although several other Fed officials have done so, CNBC said they are required to maintain independence from political pressure.