The Fed said that nearly all of its policymakers agreed that "a gradual approach to policy normalization remained appropriate" in its newly released minutes of the Federal Open Market Committee (FOMC) meeting which was held from November 7 to November 8.
A few participants who agreed further rate increases were likely to be warranted also "expressed uncertainty about the timing" as Fed officials discussed how to communicate a possible change in their approach to future hikes.
Early last month, Mr Powell said the key interest rate was probably still a "long way" from a so-called neutral level and that the Fed could even tighten policy beyond that level.
"If there has been one certainty of late it is the market's ability to misinterpret Fed Chairman Powell".
Matthew Cheslock, a trader at Virtu Financial, told CNNMoney editor-at-large Richard Quest on "Markets Now" Wednesday that the market interpreted Powell's comments as meaning that we are "closer to normal rates".
He added the Fed does not see "dangerous excesses" in the stock market, where forward price-to-equity ratios are within historical norms.
The chairman also suggested that interest rates appear to be just below the level the Fed calls "neutral", where they are thought to neither stimulate growth nor impede it.
Trump has repeatedly attacked Powell over rate increases, calling the investment banker he selected a year ago to oversee the world's most powerful central bank a "threat".
Next month's expected quarter-point increase would lift the central bank's target for the federal funds rate to a range of 2.25 per cent to 2.5 per cent.
Powell in his remarks Wednesday also raised the importance of policymakers staying flexible in charting a path of policy given that the effects of rate hikes show up with a lag - a point that was reinforced in the Fed's November minutes.
"Over the past year, firms with high leverage and interest burdens have been increasing their debt loads the most", Mr. Powell said. To date, markets have considered quarter-end meetings in March, June, September and December as "live" meetings that result in rate changes. The Fed's benchmark federal-funds rate since then has been between 2% and 2.25% - or just below the lowest estimate. "The market is putting too much weigh on the dovish arguments here; I don't think that is what he meant to signal".
The central bank chief said his colleagues and many other economists "are forecasting continued solid growth, low unemployment and inflation near 2 per cent".
According to Joseph LaVorgna, chief Americas economist at Natixis, "the Fed needs to stop raising rates".
But Powell said: "my view is that such losses are unlikely to pose a threat to the safety and soundness of the institutions at the core of the system and, instead, are likely to fall on investors in vehicles like collateralized loan obligations with stable funding that present little threat of damaging fire sales".
The Fed takes equally seriously the risks of hiking too quickly and shortening the economic expansion, and on the other hand of hiking too slowly and prompting higher inflation or financial instability, Powell said.