By Nick Timiraos 

Federal Reserve Chairman Jerome Powell returned to Capitol Hill on Thursday for a second day of testimony about the U.S. economy, interest-rate policy and financial regulation.

Mr. Powell said Wednesday during 90 minutes of testimony that officials believe their current policy stance is "likely to remain appropriate" as long as the economy grows moderately and the labor market remains strong.

Asked if that meant the Fed planned to maintain its current benchmark rate through the next year, Mr. Powell said, "I wouldn't say that at all." If new data prompted a material reassessment of the outlook, the Fed would "act appropriately," he said.

Mr. Powell appeared before the Joint Economic Committee, a bicameral panel, on Wednesday. He will testify Thursday morning at the House Budget Committee, which is headed by Rep. John Yarmuth (D., Ky.).

Fed officials have cut their short-term rate three times since July, most recently in October to its current range between 1.5% and 1.75%. Officials cut rates to cushion against the risks that the U.S. economy slows sharply from a slide in business investment and decelerating global growth exacerbated by rising trade tensions between the U.S. and China.

Businesses have told the Fed that trade uncertainty has been a "real distraction" that has weighed on sentiment and investment decisions, Mr. Powell said on Wednesday.

Mr. Powell has faced unusual public criticism from President Trump this year for not moving more aggressively to lower interest rates.

Mr. Trump said in a tweet on Thursday that Walmart Inc.'s quarterly earnings numbers, which showed annual sales had increased but income had fallen, showed that his tariffs hadn't hurt growth. "No impact from tariffs.... Inflation low (do you hear that Powell?)!" Mr. Trump said.

Mr. Trump's attacks on the Fed ended a bipartisan precedent extending to the Clinton administration in which presidents didn't publicly direct the central bank on how to set policy. In the 1960s and 1970s, inflation accelerated after presidents pressured the central bank to stimulate growth.

Mr. Yarmuth said Thursday he supported the principle that the Fed should have greater independence in setting policy, and he called Mr. Trump's repeated attacks of the Fed "unacceptable and dangerous."

Separately Wednesday, Mr. Powell repeatedly highlighted the risk that monetary policy will have less ability to counteract a future recession because short-term rates and long-term bond yields are lower than they have been in past periods of steady growth and rising employment.

In recent downturns, the Fed has cut its short-term rate by around 5 percentage points. "We're too close, closer than we would like, to zero, when we kind of run out of options," said Mr. Powell.

Write to Nick Timiraos at nick.timiraos@wsj.com

(END) Dow Jones Newswires

November 14, 2019 10:32 ET (15:32 GMT)