But that doesn't mean rates won't rise further, as most officials said another rate increase was likely, perhaps as soon as next month.
Powell's comments appeared to reverse previous remarks he made in early October, when he said that rates were probably still a "long way" from the level the Fed considers to be neutral, signaling a willingness to pressure interest rates even higher.
The US Dollar basket (DXY) dipped lower but remains in a strong uptrend, underpinned by interest rate expectations. For the stock market, he emphasised that current valuations are broadly in line with the long term levels and do not see "dangerous excesses" in equities.
Speaking to the Economic Club of NY, the Fed chairman also said that while some corporate debt loads have reached riskier levels, "we do not see unsafe excesses in the stock market".
The Fed raised its benchmark rate in March, June and in September, with the last increase putting it in a range of 2 per cent to 2.25 per cent.
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"Interest rates are still low, by historical standards, and they remain just below the range of estimates of that level, that would be neutral for the economy", said Powell.
And he repeated the view that the Fed's policy rate - at 2.25 percent - is "just below" the estimate of neutral, a rate that neither stimulates nor restrains the economy. "I am pleased to say that our economy is now close to both of those objectives", Powell said in an appearance at the Economic Club of NY.
Late last month he said he was very unhappy with the Fed because Obama had zero interest rates while he "maybe regrets nominating him to become the Fed chair." It followed several weeks of market volatility that some investors had blamed on uncertainty over the Fed's intentions, among other things.
Rather, he said, the Fed will assess the most recent economic and financial data in deciding whether or how fast to keep raising rates. The law creating the Fed says such officials can be "removed for cause". Investors have been bracing for higher interest rates in the face of possible inflation stemming in part from Trump's trade wars as well as the tax cuts he pushed through Congress late a year ago. I'm doing deals and I'm not being accommodated by the Fed. Some analysts are now saying the Fed may decide to raise rates only once or twice in 2019. The general consensus is that a rate hike in December will most certainly occur as the CME Group's FedWatch Tool, an algorithm that calculates the probability of a rate hike in a given month, is now showing an 82.7% chance the Federal Reserve will institute a fourth rate hike to end 2018. Home sales, vehicle sales, business investment and other parts of the economy that are sensitive to interest rates have begun to soften, evidence that the Fed's eight rate increases since 2015 are changing household and business behaviour.