In a speech to the Economic Club of New York, Mr Powell said: "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".
The need for "further gradual rate increases" as appropriate to keep the current recovery on track has been a staple of recent Fed policy statements as the central bank nudged rates back toward more normal levels after a decade near zero. The US federal funds rate range is now 2.0-2.5 per cent.
Though Mr Powell's comments were markedly different from his characterisation of Fed policy last month, he left ample room for the central bank to continue raising rates, depending on the economy's performance. His remarks Wednesday appeared to suggest to this audience that he might stop sooner or move more slowly.
Powell noted the word "bubble" wasn't mentioned in the report, though he said some asset prices, such as corporate debt, were high relative to the past. "All he is doing is pointing out an obvious idea", Porcelli wrote in a client note. The first grade of Powell's tenure, in April, was 3.82.
He said then that growth overseas was likely to weaken and that United States fiscal stimulus, which had goosed consumption, would soon fade.
The US central bank chairman has repeatedly tried to advise investors not to read too deeply into the Fed's economic forecasts, saying policymakers often don't have the ability to see that far into the future and decisions are formed based on incoming data from markets, the economy and business contacts. While interest rates were gradually moving to a neutral point, "we're a long way from neutral at this point, probably".
The possibly dovish shift in language on Wednesday came as President Donald Trump stepped up attacks on Powell, criticizing the Fed's rate hikes as undercutting his economic and trade policies. But signs of a slowdown overseas and almost two months of market volatility - including a sharp selloff last week - have clouded an otherwise mostly rosy US picture in which the economy is growing well above potential and unemployment is the lowest since the 1960s. Then: Home sales have fallen to their slowest pace in two years, and low inventory in the housing market isn't helping.
Nearly all Federal Reserve officials at their last meeting agreed another interest rate increase was "likely to be warranted fairly soon", but also opened debate on when to pause further hikes and how to relay those plans to the public. "Large, sustained declines in equity prices can put downward pressure on spending and confidence".
But policymakers may be divided over what to do after that, with some anxious that raising rates after December could "unduly slow" the American economy, just as signs of vulnerability are beginning to gather, the minutes showed.
By saying rates were slightly lower than the level he perceives as "neutral", the Fed chief's statement appears to be suggesting at least one more interest rate increase is coming in the near future.
But from there, paths diverge.
Trump's blunt public criticism of the Fed is without precedent.