Washington (AFP) - A day after President Donald Trump's latest attack on the US central bank, Federal Reserve chief Jerome Powell hinted that the key lending rate would move higher but said there was no preset course.
Powell said in a speech in New York that interest rates remained "low by historical standards" and still provided stimulus to the economy. But he said the Fed's gradual increases balanced the risks between raising too much and not enough.
He also said the central bank did not see "dangerous excesses" in stock markets, with the financial system now "substantially more resilient" than it was before the 2008 financial crisis.
Trump on Tuesday again blasted his hand-picked chief of the US central bank, saying he was "not even a little bit happy" with his selection of Powell.
The Federal Reserve chairman has presided over three interest rate increases this year and is widely expected to hike again in December.
In an interview with The Washington Post, Trump said the Fed was "way off base."
"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," the president added.
Trump has repeatedly attacked Powell for continuing to raise the benchmark lending rate, which he says undermines the work he is doing to juice the US economy.
In his speech to the New York Economic Club, Powell again stressed that there was "no preset policy path" for interest rates and said the central bank had moved gradually, since "moving too fast would risk shortening the expansion."
But keeping rates "too low for too long" could create other risks, including accelerating inflation, he said.
And Powell repeated the view that the current level -- at 2.25 percent -- is "just below" the estimate of neutral, a rate that neither stimulates nor restrains the economy.
"As always, our decisions on monetary policy will be designed to keep the economy on track," he said.
Powell and other officials have dismissed the sustained political attacks from Trump, saying they have no influence on deliberations of the independent central bank.
But many economists warn that by attacking the Fed for raising rates, Trump is actually putting pressure on the central bank to raise rates to demonstrate its independence from political considerations.
Powell's speech was focused largely on a new Fed report on stability of the US financial system, but contained an unusual comment:
"By clearly and transparently explaining our policies, we aim to strengthen the foundation of democratic legitimacy that enables the Fed to serve the needs of the American public."