Powell's latest comments came after USA equities finished their worst year in over a decade.
Thursday's brief drop stood in contrast to the response to Powell's remarks last Friday, when the Dow surged 747 points after Powell said the Fed is willing to be "patient" and "flexible" about future interest rate hikes - sentiments he reiterated Thursday. Statements of its President, Jerome Powell and his colleagues make it clear that the next interest rate move is in the offing in the near term.
At the close, Wall Street finished up for the day but it does not take much for investors to run for the exits, with markets already on edge amid concerns the global economy is slowing just as interest rates are rising and uncertainty about the US-China trade war. Since then, stock markets endured a topsy-turvy end to the year as the USA government shut down and global trade tensions ratcheted higher.
Asked about the expectations for the Fed's policy meeting later this month, Powell said, "you should anticipate we are going to be patient and watching and waiting and seeing".
While most previous shutdowns have been fairly short and have not affected the economy in the aggregate, Powell said, "if we have an extended shutdown, I think that would show up in the data pretty clearly".
Powell's comments underscored the more wait-and-see approach to interest-policy that Fed officials have been discussing in this month.
Eric Rosengren, president of the Boston Federal Reserve Bank, one of 12 in the Fed system, said financial markets had become "unduly pessimistic" about the economic outlook but like others he agreed policymakers should heed their warning.
"I don't see a recession", Powell said.
While he has near weekly meetings with Treasury Secretary Steven Mnuchin, Powell said he has not met with Trump since taking over as Fed chairman, nor does he have any meetings with the president scheduled. Policymakers also signaled at that meeting they were on track for two rate hikes in 2019.
The European Central Bank is widely expected to remain accommodative in 2019, which should keep a lid on the single currency. He also made clear that applies to the Fed's approach to its US$4.1 trillion balance sheet, which the central bank is now reducing by a maximum of US$50 billion per month. He said the Fed's aim was to return the balance sheet to a "more normal level" but didn't specify what that level will be.
Part of that message is meant to downplay the significance of the policy projections that officials issue every three months.
The BEA monitors the gross domestic products (GDP) of the United States and many other crucial indicators, including a data set named "Personal Consumption Expenditures Price Index", which is Fed's most-preferred indicator of inflation.