"We're listening with - sensitively to the message that markets are sending and we'll be taking those downside risks into account as we make policy going forward". Powell said he did not think the latter was having much impact on markets, but that the strategy would be changed if it started interfering with the bank's broader goals of maintaining strong employment and stable inflation.
Both of those messages cheered stock market investors who had been anxious about Trump's repeated attacks on his hand-picked choice to lead the nation's central bank and also the Fed's seemingly inexorable march to higher rates.
Powell's remarks reassured investors who have anxious the Fed might raise rates excessively, but Jason Schenker of Prestige Economics suggested the Fed could.
Since mid-December, investors have been expressing disagreement with Powell's assessment of the economy, saying the Fed had it all wrong and that the economy was weakening. "We're hearing a lot from different groups of people about the role the balance sheet normalization may be playing in the market", Powell said.
Trump hits back at Romney criticism
Romney also emphasized that in his campaign to be a Utah senator campaign, Trump was " endorsing me, I wasn't endorsing him ". It is unclear whether Trump will face a serious challenge in 2020 to securing the Republican party's presidential nomination.
At the conference on Friday, Mr Powell said he has not spoken directly to Mr Trump and would not resign if asked.
"We are in a new world", Mester said, where the obvious need to raise rates has given way to a situation where economic growth is expected to slow, wages are rising on the basis of low unemployment, interest rate sensitive sectors of the economy like housing have ebbed, and the unemployment rate has roughly "stabilized" at a low level. He acknowledged that recent economic reports out of China were mixed, but noted that the Chinese authorities are responding with additional stimulus.
Former treasury secretary Henry Paulson said that China "is under a microscope". On Friday, his softer tone eased investor concerns about further tightening, noting that the Fed will be flexible with all of its monetary policy tools, including the important balance sheet.
He argued that the amounts involved are not big - the Fed is reducing its bond holdings by a maximum of $50 billion per month - and that the central bank's actions on that front were not a major reason for the financial turbulence last quarter. Taking part in the same panel discussion as Paulson on January 5, he said he was neither anxious nor shocked by the recent sell-off in equity prices.
The pace of Fed rate hikes and the lowering of the balance sheet, which tends to put upward pressure on interest rates, had both been concerns of investors in recent months.
Trump has complained that the Fed has pushed rates higher despite the fact that there is no evidence that inflation was getting out of control.