"We will be patient as we watch to see how the economy evolves", he said.
In remarks to the American Economic Association, Powell soothed market nerves with assurances that the central bank is sensitive to risks that worry investors and is not on a preset path of interest rate hikes.
Not Worried Bernanke agreed, saying the evidence of big adverse effects from the balance sheet run-off was weak.
The average hourly wage also rose by 3.2 per cent, its highest increase since 2009.
"With the market pricing out any Fed hikes for this year, will a strong NFP print this morning see dealers reversing their decision that the Fed is ready to abandon its rate hike plans when employment growth is still so strong?" he questioned. Do we need to move more, faster?
Powell gave as an example the fact that in 2016, when Janet Yellen was Fed chair, the central bank began the year with a projection that it would raise rates four times that year but ended up raising rates only once because the economy hit a soft-patch.
In the first event, the Labor Department's December jobs report showed the economy added a robust 312,000 jobs.
"The market's been grappling with growth, the Fed and China", said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware. "Can we wait?", Cleveland Federal Reserve Bank President Loretta Mester said in an interview with Reuters.
The head of the Fed, once confirmed by the Senate, can only be removed "for cause", not a policy disagreement.
Larry Kudlow, director of the White House National Economic Council, told Bloomberg TV on Friday a meeting between the two men hasn't yet been set.
Latest White House Meeting on Government Shutdown Resolves Nothing
Democrats intend to introduce a pair of funding bills that would end the shutdown, but without federal funding for a border wall. Once that happens, their hope is that the tide will turn against Trump and he'll be pressured to give up on the wall funding.
The dollar strengthened. It rose to 108.51 yen from 107.77 yen.
Treasury yields rose on Friday after the US employment report for December came in more robust than expected, and on the back of USA equities, which hit session highs as Federal Reserve Chair Jerome Powell struck a dovish tone in a roundtable interview.
Volume on US exchanges was 8.68 billion shares, compared to the 9.14 billion average over the last 20 trading days.
The Fed's tightening cycle includes both rate hikes and the gradual shedding of its more than $4 trillion (3 trillion pounds) in assets.
In contrast to the recession chatter recently making the rounds in financial markets, Powell delivered a positive assessment of the U.S. economic outlook to the American Economic Association's annual meeting.
Mr Powell said he thought the recent market declines reflected concerns about slowing global growth and trade tensions - but are "well ahead of the data".
"I'll just say that we are listening carefully to that., listening sensitively to the message that markets are sending, and we are going to be taking those downside risks into account as we make policy going forward".