U.S. stock markets jumped following the comments, as investors interpreted them to mean the central bank was close to the end of its tightening cycle, which has seen eight rate increases since December 2015 following the global financial crisis.
"You're no longer on a forced march to neutrality, " he said.
The Fed's current pattern of raising rates gradually - roughly once a quarter over the past two years - is an effort to balance two risks. He subsequently put pressure on Burns to keep interest rates down in the hope that unemployment would remain low in the run-up to the 1972 presidential election.
The president a year ago selected Powell, at the time a Fed board member, to lead the central bank after a highly public selection process in which he chose not to offer a second term to Chair Janet Yellen.
Speaking to the Economic Club of NY, the Fed chairman also said that while some corporate debt loads have reached riskier levels, "we do not see unsafe excesses in the stock market".
Meanwhile in the US where the key rate is 2%-2.25%, the US Federal Reserve is signaling a slowdown in its planned rate hikes following fierce criticism by President Donald Trump.
The spread on euro-dollar interest rates future is negatively correlated with emerging markets as higher interest rates in the United States dim the appeal of risky assets.
In what was seen as a shift in tone from remarks last month, Powell said Wednesday that the Fed's series of rate increases had brought policy to "just below" the range of estimates of neutral, where it neither spurs nor restricts the economy.
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But Fed members agreed they would offer fewer signals about the future in their public statements, insisting, as Mr Powell did this week, that they would instead monitor economic data and respond accordingly.
"I'm doing deals, and I'm not being accommodated by the Fed", Trump was cited as saying in a Washington Post report based on the interview.
Powell, in remarks just two weeks ago, had listed three possible challenges to growth in 2019: slowing demand overseas, fading fiscal stimulus at home and the lagged economic impact of the Fed's past rate increases.
"As always, our decisions on monetary policy will be created to keep the economy on track", he said.
The speech was "a reassuring message from a market perspective because it removes concerns of a Fed dead set on tightening up to a point where rates would intentionally slow down the economy", he added.
"I don't see this month's reading as a reason to step away from normalizing policy or change their overall view of the USA economy". If the Fed is deterred from keeping rates too low for too long, the likely upshot will be a burst of inflation and interest rates that have to be raised aggressively later on to combat it, jeopardising growth and risking higher unemployment.
Those trends, he said, were coinciding with inflation remaining "right on target" at the Fed's goal of 2 percent annual price increases.
Still, he judged the area posed little systemic risk, labeling broader, overall risks to financial stability as "moderate".