Washington (CNN Business) Federal Reserve Chairman Jerome Powell on Tuesday hailed the independence of central banks, a signature of the financial system established more than a 100 years ago.

"Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests," said Powell in brief remarks in New York at the Council on Foreign Relations.

The Fed chairman also pointed to other central banks in "major democracies around the world" that share similar independence. President Donald Trump has hailed Chinese leader Xi Jinping's authority over his own country's central bank.

Powell's latest comments come a day after Trump said the central bank was acting like a "stubborn child" for refusing to pursue easy money policies.

On Monday, Trump tweeted that the Fed "doesn't know what it is doing."

"Think of what it could have been if the Fed had gotten it right," Trump tweeted. "Thousands of points higher on the Dow, and GDP in the 4's or even 5's. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!"

Rarely has a president put so much public political pressure on the Fed, whose interest rate policies affect the prices of mortgages, credit cards and other borrowing. Trump, who named Powell to a four-year term in November 2017, has gone so far as to threaten to fire Powell.

"I'm not happy with his actions," said Trump referring to Powell. "No, I don't think he's done a good job."

Powell has sought to distance himself from Trump's criticism, saying the Fed doesn't consider politics in its policy decisions and he has no plans to leave before his term expires in 2022.

The Fed chairman is facing considerable pressure to keep the US economy steady. Concerns are intensifying that Trump's tariff strategy may end up hurting global growth.

On Tuesday, Powell stressed that policy makers would carefully monitor economic developments, warning they "should not overreact" to a single event in deciding whether or not to cut rates.

He said policy makers are "grappling" with whether rising trade tensions, softness in the global economy and signs of muted inflation will continue to weigh on the American economy.

The Fed last week decided to maintain rates hovering between 2.25% and 2.5%, while signaling the potential for at least one, if not two, rate cuts later this year.

Powell said that "many" members of the Fed's policy committee believe the case to cut rates "has strengthened." But, he added, "We are also mindful that monetary policy should not overreact to any individual data point or short-term swing in sentiment. Doing so would risk adding even more uncertainty to the outlook."

Fed officials are now split between whether to continue indefinitely holding rates level for the remainder of the year or to make at least one, if not two, rate cuts in the second half amid intensifying trade tensions . Eight out of the 17 officials were in favor of keeping rates the same last week.

For the last several months, Powell has preached patience when it comes to rate-setting policy. But with uncertainty over on-again, off-again trade talks between China and the United States , the world's two largest economies, and the threat of tariffs on nearly all remaining Chinese goods, the Fed is now beginning to signal a more a nimble approach.

"Since the beginning of the year, we had been taking a patience stance toward assessing the need for any policy change," said Powell. "We now state that the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate the sustain the expansion."