The dollar also firmed to 108.96 yen, while the euro faded to $1.1204 having been as high as $1.1412 just a couple of weeks ago.
USA stocks edged higher and the dollar fell as hopes rose for an imminent interest-rate cut, while oil futures were little changed as supply worries triggered by a tropical storm were offset by signs of a global surplus for several months.
As regards the labor market, which added a higher-than-expected 224,000 jobs in June, Powell said there has been no evidence yet "for calling this a hot labor market".
Markets are now pricing in a 25-basis-point cut at the Federal Open Market Committee's next session on July 30-31.
The Dow Jones Industrial Average .DJI rose 142.84 points, or 0.53%, to 27,230.92, the S&P 500 .SPX gained 6.55 points, or 0.22%, to 3,006.46 and the Nasdaq Composite .IXIC added 29.14 points, or 0.36%, to 8,225.18.
"This argues against aggressive monetary stimulus from the central bank", said Chris Rupkey, chief economist at MUFG in NY.
Inflation has been muted throughout the 10-year expansion, now the longest on record, even as the unemployment rate has dropped to a very low 3.7%.
Traders have priced in a 100 percent likelihood of a Fed rate cut in July, according to the FedWatch tool from CME Group.
Earlier on Thursday, the government reported that underlying consumer price inflation ticked up at its briskest pace in almost a year and a half last month and the labor market shows no signs of weakening.
Powell also cited uncertainties about trade and the global economy as threats to USA economic growth during his Wednesday testimony. This was the largest increase since January 2018 and followed four straight monthly gains of 0.1%.
"It is fair to say that such a cut would be unprecedented in modern times given overall financial conditions and the balance of economic data", Michael Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note.
"This may suggest that the U.S. economic expansion is at a greater risk than what recent data are showing and may also be seen as political influence from the White House", Sayed warned.
On the inflation outlook, the Fed Chair noted that there are risks that weak inflation could be even more persistent than the Fed is now anticipating.
Hopes that the Fed would step in to keep the economy humming have risen sharply since May when trade negotiations between the United States and China stalled.
Trump signed an executive order on February 9, 2018, suspending the debt ceiling until March 1, 2019, when the national debt exceeded 22 trillion US dollars.
The chairman said the Fed doesn't pay attention to any of the negative commentary and criticism from the president.
"Fed fund futures were telling us for a month that was going to happen, but Powell has pretty much confirmed that's the case".