He also said that the Fed had no preset path for rate hikes and would be "patient" when determining whether to hike interest rates further in response to strong USA growth that risks sparking inflation, or to pause rate hikes to account for a global economic slowdown. "You should anticipate that we're going to be patient and watching, and waiting and seeing". The Fed's communications - and a Bloomberg News report that President Donald Trump had discussed firing Powell - helping bring on the worst December for stocks since the Great Depression.
After four rate hikes previous year, the Fed would be "bordering on going too far and possibly tipping the economy into recession" if rates go higher, Bullard said, adding that he would be willing to cut interest rates if needed. However, many economists believe the Fed may end up raising rates only once in 2019, and that solo rate hike may not occur until the middle of the year.
The balance sheet "will be substantially smaller than it is now", though bigger than it was before the crisis, Powell said.More news: Padraig Harrington named Ryder Cup captain
Speaking to an audience in Washington, Powell delivered the same reassuring message of restraint and flexibility that bolstered markets last Friday.
His comments and remarks this week by other Fed officials have all suggested the central bank is prepared to pause its string of rate hikes at the beginning of this year to assess the impact of the Fed's credit tightening.
The more flexible approach, apparent in the minutes and in recent speeches, has supported stock prices.
US Federal Reserve Board Chairman Jerome Powell participates in a luncheon discussion hosted by the Economic Club in Washington, US, Jan. 10, 2019.More news: Canberra to decide Saudi's fate after United Nations refugee ruling
The Fed chief was also asked about the partial USA government shutdown.
But the Fed said policymakers would watch for incoming data to see how the economy performs amid current uncertainty about trade frictions and volatility on financial markets.
"We are very focused on our job", Powell said. "The principal worry we have is global growth" in Asia, Europe and elsewhere. Fed chairs have met with presidents in the past, he added.
Bullard has been arguing, mostly unsuccessfully, for the Fed to hold off on rate increases because inflation isn't posing a risk of accelerating much beyond officials' 2 percent target. The unemployment rate stands at 3.9 per cent and central bankers expect it to average 3.5 per cent in the final three months of this year. "The US economy is solid".More news: Tim Tebow Is Engaged!