Sliding equity prices, weakness overseas and mixed economic data at home have prompted calls for the Fed to put rates on hold, but the US labor market remains red-hot.
While President Donald Trump has been a vocal critic of the Federal Reserve in recent months, Federal Reserve Chairman Jerome Powell says he would not resign if the president asked him to.
Earlier on Friday, the Labor Department reported that nonfarm payrolls jumped by 312,000 jobs, well above market expectations, while wages and labour force participation rose, all signals of sustained economic strength.
On December 19, the Federal Reserve increased the interest rate for the fourth time in 2018 - from 2.25 percent to 2.5 percent.
Mr Powell said he thought the recent market declines reflected concerns about slowing global growth and trade tensions - but are "well ahead of the data".
There is "no pre-set path for policy and particularly with the muted inflation themes coming in we will be patient as we see how the economy evolves", Mr Powell said.
Fed Chairman Jerome Powell will be joined by Janet Yellen and Ben Bernanke in Atlanta on Friday in Atlanta.
The president has accused Powell of hurting the economy by raising interest rates.
"Despite this dovish tone, we are sceptical", Schenker said in a note.
"The problem in my opinion is Treasury and the Fed", Trump said.
"Fundstrat's Thomas Lee writes that the move diminishes the risk of Fed policy error going forward: "He would go further and say risk is now "'off the table' but those would be famous last words". The Fed funds futures market is now pricing in a 40% chance of a rate cut by the end of this year.
Dallas Fed President Robert Kaplan said on Thursday that planned rate hikes should be halted for now, while on Friday Mester said she sees only one or two rate hikes this year.
"The markets are feeling better that the Fed is not strangling the overall economy and perhaps forcing it into a recession, and that removes a monetary policy concern that has been hanging over the market for the past few months", said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC. "The jobs report released today was strong across the board", writes The Conference Board's Gad Levanon, who believes this is the latest stat to show that it's too soon to talk about a recession.