Trump reportedly has been complaining to anyone who will listen - including a crowd of donors in the Hamptons last weekend - about the Fed raising rates.
"If the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate", Powell said in a speech at the Fed summit in Jackson Hole, Wyo.
Analysts said growing USA political uncertainty, reinforced by the criminal convictions of two of Trump's ex-advisors this week, was keeping the dollar under pressure, despite the United States embarking on greater monetary tightening than elsewhere.
Powell sketched a positive picture of the US economy and said the Fed's incremental approach to raising rates has so far succeeded.
Powell said in his Jackson Hole speech: "The economy is strong".
The Fed's key rate is in a range of 1.75 percent to 2 percent and officials have pegged the neutral rate at 2.9 percent.
The Fed seems to be "doing as good a job as they cannot to overshoot" the tightening of monetary policy, said David Levy of Republic Wealth Advisors.
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Trump on Monday criticised the Fed for hiking rates too quickly, saying he was "not thrilled" with Powell, his own choice to lead the Fed.
On Wall Street, the Dow Jones Industrial Average rose 139.04 points, or 0.54 percent, to 25,796.02.
Increasing consensus at the Federal Reserve on the need to continue raising United States interest rates was on display at the start of a global central bankers meeting here, as the longstanding distinction between so-called policy hawks, centrists and doves blurs in the face of falling unemployment. "Inflation has moved up and is now near the Federal Open Market Committee's (FOMC) objective of 2 percent after running generally below that level for six years".
Powell did not drop any bombshells nor did he mention Trump or provide much in the way of diverting from a path of gradual interest rate hikes.
Investors have fully priced in a rate increase next month and see an above-60 percent probability of another move by the Fed's meeting in December.
Trump believes that rate hikes would hinder economic growth and put a cap on the bullish US stock market.
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They're trying to force this issue, ' he said. " It's a worry but it's only the second game of the season so it's not terminal ".
Economists said Powell's remarks Friday echoed the message he has sent since succeeding Janet Yellen as Fed leader in February. But the response was not an inflation hawk's defense of slowing the economy to hold down inflation.
White House audio recordings show that President Richard Nixon pressured then-Fed Chairman Arthur Burns to keep interest rates low to boost Nixon's re-election chances in 1972.
"Overall, his speech did not signal any change in policy", Michael Pearce, senior USA economist at Capital Economics, wrote in a note.
What our economists say "Powell stated it loud and clear: Gradual interest-rate hikes are appropriate". Trump was once again scolded by the press for criticizing the Fed a second time.
It was not the first time he had struck out at Fed policy for not supporting faster economic growth but he went even further when he also declined to confirm his support for the central bank's independence, something that has the potential to worry financial markets.
The Fed's economic projections, compiled from estimates of all Fed officials, estimates the current neutral rate at 2.9 per cent.
Powell's discussion of the challenges of monetary policy at a time of uncertainty is an introduction to his chairmanship and how different it will be from his predecessors.
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