Powell said on Wednesday that US interest rates were "just below" neutral, less than two months after saying rates were probably "a long way" from that point.
Stocks and interest-rate futures jumped, even while economists wrestled to interpret whether Powell meant to send a message or was simply misunderstood.
Powell's comments sparked a surge in a stock market that had struggled of late and came in the wake of repeated criticism of the Fed's rate increases by President Donald Trump. This should be clarified at the next meeting on December 18-19.
In an interview this week with The Washington Post, Trump said he was not happy with Powell's support for further rate hikes.
While Fed officials expected solid growth to continue before slowing to a pace closer to its trend over the medium term, they still saw some risks. But Powell's comments are prompting speculation among many investors that a looser policy may lie ahead.
USA central bankers believe another interest rate hike is due "fairly soon", boosting widespread expectations the Federal Reserve will raise lending costs next month, according to meeting minutes released Thursday.
The fed fund futures contract expiring in January 2020, a heavily traded contract that reflects market expectations for where rates will be at the end of 2019, rallied sharply on record volume and pointed to an implied yield of 2.70 percent. The Fed altered its stance on rates to "just below the neutral rate" from its earlier articulated position of "a long way to neutral", lowering the chances of quick increases in the cost of funds.
The minutes also contained a lengthy discussion of the Fed's operating strategy and how that links to banks' preference to hold abundant excess reserves after the financial crisis.
Powell also revealed the economic growth coincides with inflation, and the Fed's annual goal of 2 percent interest rate increases.
Stock markets began a broad descent toward a correction - a decline from the most recent peak of at least 10 percent - in early October, just after Powell had sounded a quite confident tone on the economy. "And I'm not blaming anybody, but I'm just telling you I think that the Fed is way off-base with what they're doing", he was quoted as saying in the report.
The minutes from the rate-setting Federal Open Market Committee's November 7-8 meeting showed a rising level of uncertainty in the central bank about the near future.
The Fed has been trying to strike a balance between not moving too fast and risking shortening the economy's longest running expansion versus not moving too slowly and risking the economy overheating. Speaking on Wednesday, Powell said the effects of Fed policy decisions "may take a year or more to be fully realized".
Policy makers provisionally penciled in three quarter-percentage-point rate increases for next year, according to the median of forecasts released in September's so-called dot plot.
The Fed has raised rates three times this year and says the current economy is in strong shape.
The transition comes as the Fed's target policy rate, left at 2 percent to 2.25 percent in November, grinds closer to the 2.5 percent to 3.5 percent range of Fed officials' views of where a rate that neither boosts nor cools a healthy economy lies.