In testimony provided to the House Financial Services Committee on Tuesday, Powell reiterated what he said during the Fed's two-day meeting in January: The U.S. economy has remained insulated from a global growth slowdown, thanks to a series of three modest rate cuts in 2019.
Unless incoming data changes, policymakers will likely remain on the sidelines this year, he said, sparking ire from President Trump, who's urged the Fed to cut the benchmark federal fund rate to zero -- or lower.
"As long as incoming information about the economy remains broadly consistent with this outlook, the current stance of monetary policy will likely remain appropriate," Powell said in prepared remarks. "Of course, policy is not on a preset course. If developments emerge that cause a material reassessment of our outlook, we would respond accordingly."
In its 61-page monetary policy report provided to Congress last week, which it's required to provide twice a year, the central bank said the odds of the U.S. sliding into a recession have shrunk considerably, even though a manufacturing slump and global growth weighed on the outlook last year.
Still, Powell did identify the rapidly spreading coronavirus — more than 1,000 people have died from the mysterious illness, while Chinese officials confirmed more than 40,000 cases — had emerged as a new risk to the global economy. Multiple companies and countries are limiting travel to and from mainland China, evacuating citizens and scaling back operations, raising concerns about the health of the world's second-largest economy.
He acknowledged the virus would likely weigh on the Chinese economy, the second-largest in the world, and warned that could weigh on the broader global outlook. But he said it was ultimately "too early to say" what the effects will be.
"Some of the uncertainties around trade have diminished recently, but risks to the outlook remain," Powell said. "In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy."
Powell also expressed some misgivings about historically low interest rates, which he said limited the Fed's ability to support the economy in case of a downturn. He urged Congress to tackle ballooning deficits and the national debt while the economy, currently in its 11th year of expansion, is still strong.
Over the past few months, the benchmark federal fund rate has sat at a range between 1.5 percent and 1.75 percent, following three modest cuts in 2019.
"The current low interest rate environment also means that it would be important for fiscal policy to help support the economy if it weakens," he said. "Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn."