While the Fed is expected to raise rates by a quarter point at its meeting on Dec 19, it has forecast to have three more hikes next year. The president has blamed the Fed for the steep two-month fall in the stock market and the possibility that his efforts to boost growth with a major tax cut will be thwarted by rising interest rates.
The current Federal Fund rate is 2.25 per cent, and there is a 77 per cent probability of a 25-basis point increase in the December meeting scheduled in the week before Christmas.
By saying rates were slightly lower than the level he perceives as "neutral", Mr Powell's statement appears to be suggesting at least one more interest rate increase is coming in the near future.
Powell's dovish comments mean the probability of accelerated pace of rate increases in the U.S. is rather low, and that should burnish the appeal of all emerging market assets.
His renewed focus on the "neutral" level of interest rates as a potential turning point for policy that until now has been on a steady tightening path is echoed by the minutes.
Earlier in November, Powell was optimistic about the state of the economy, citing strong annual economic growth exceeding 3 percent and unemployment at a near five-decade low of 3.7 percent.
The central bank kept rates close to zero for years in an effort to nurse the economy back to health in the wake of the 2008 financial crisis.
Analysts read that as a suggestion that Powell intends to be more cautious about hikes in rates.
Powell remains upbeat on the economy, forecasting continued solid growth, low unemployment and inflation near the Fed's 2 percent target.
"A couple of participants noted that the federal funds rate might now be near its neutral level and that further increases in the federal funds rate could unduly slow the expansion of economic activity and put downward pressure on inflation and inflation expectations", said the minutes.
"Powell is not suggesting that since they are just below the range they may stop soon". And Powell's own communications plans to end each meeting with a news conference starting next year mean he needs a clear message for each meeting, starting next month. "And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing", he was quoted as saying in the report.
After the release of the Fed's meeting minutes, traders of interest-rate futures stuck to their bets that the Fed would slow rate hikes next year, to just one. Federal Reserve Chairman Jerome Powell ignited a market rally Wednesday by saying interest rates are "just below" broad estimates of a level considered neutral, a setting created to neither speed nor slow economic growth. Home sales, vehicle sales, business investment and other parts of the economy that are sensitive to interest rates have begun to soften, evidence that the Fed's eight rate increases since 2015 are changing household and business behaviour. Three of those increases have been under Powell.
On Wednesday, Jerome Powell offered few explicit clues on how many hikes will be necessary in 2019, but repeated his view the Fed will have to be especially responsive to the data.
"There is a great deal to like about this outlook", said Powell on Wednesday.