The Federal Reserve chairman has presided over three interest rate increases this year and is widely expected to hike again in December.
Mr Trump has criticised Mr Powell repeatedly this year, saying that the base rate is unnecessarily high and risks curtailing an economic boom in the US.
Tensions over trade, the turbulent Brexit discussions and trouble in China and emerging markets could rock a U.S. financial system where asset prices are "elevated" and business credit quality may be "deteriorating", the Federal Reserve said in a first-ever report devoted to financial stability.
Powell "gave the market, and presumably President Trump, exactly what he wanted, which was an admission that the previously proposed path of future rate hikes was probably too aggressive and opening to slowing the rate of hikes", said Oliver Pursche, vice chairman and chief market strategist at Bruderman Asset Management in NY.
And he said economists estimated the Fed's policy rate - at 2.25 per cent - was "just below" the estimate of neutral, a rate that neither stimulates nor restrains the economy.
Powell was not asked about escalating criticism of him from President Trump, who has complained that rising interest rates are hurting the economy.
But signs of a slowdown overseas and almost two months of market volatility - including another sharp selloff last week - have clouded an otherwise mostly rosy USA picture in which the economy is growing well above potential and unemployment is the lowest since the 1960s.
"They're making a mistake because I have a gut and my gut tells me more sometimes than anybody else's brain can ever tell me", Trump said in an interview with The Washington Post.
Ian Shepherdson of Pantheon Macroeconomics said markets were reading too much into Powell's statement and with historically low unemployment, the Fed may have no choice but to keep raising.
Speaking to the Economic Club of New York Powell said interest rates were now "just below" the range Fed officials consider neutral, a setting created to neither speed nor slow growth.
He said that while there was "a great deal to like" about United States prospects, the Fed's gradual interest-rate hikes are meant to balance risks as it tries to keep the economy on track. "You feel your way more under uncertainty of this kind".
The report is the first of what the Fed intends as a twice yearly review of risks to financial stability, defined as the degree to which the financial system can continue to lend to businesses and households even when subjected to an outside shock.
And he said the financial system was now "substantially more resilient" than it was before the 2008 financial crisis.
Powell in a recent public appearance said policymakers had suffered "a failure of imagination" back then regarding how central financial stability was to the economy overall.
Conor McGregor loses driving privileges for six months
McGregor pleaded guilty to going over the 100kph speed limit at Blackchurch on the N7, Kill, Co Kildare on October 11, 2017. A mass brawl involving both sides erupted inside and outside of the Octagon after the fight.