The central bank chief acknowledged the threats officials see to the job market but also the risky nature of making further rate moves without a fuller picture of the economy.
The Fed on Wednesday cut interest rates by a quarter of a percentage point, as expected, as a way to temper any further weakening of the job market.
But the central bank's new policy statement included several references to the lack of official data during a federal government shutdown, and Powell later told reporters that policymakers are likely to become more cautious if it deprives them of further job and inflation reports.
"We're going to collect every scrap of data we can find, evaluate it and think carefully about it. And that's our job," Powell said in a press conference after a two-day policy meeting, as he ticked off private data the Fed can use, along with its own in-house surveys of business executives and less formal interviews with a range of contacts around the country.
"If you asked me could it affect ... the December meeting, I'm not saying it's going to, but yeah, you could imagine that. You know, what do you do if you're driving in the fog? You slow down."
His comments show the developing dilemma for the Fed as a budget dispute between the Trump administration and Democrats in Congress extends into a second month, with the government unable to carry out surveys and produce reports that are key to central bankers' policy decisions - in this case possibly delaying rate cuts that President Donald Trump himself wants.
Beyond the data issues, Powell said there were "strongly differing views" among his Fed colleagues about the appropriate path for monetary policy moving forward, with "a growing chorus now ... feeling like maybe this is where we should at least wait a cycle" before cutting rates again.
Financial markets responded to Powell's remarks by reducing bets on another rate cut at the Fed's December 9-10 meeting, a prospect now given roughly two-to-one odds, with the S&P 500 index ending the day largely flat after giving up earlier gains.
"Powell explicitly signalled a break between this and future meetings," as he manages a policy-setting committee that agreed to consecutive rate cuts in September and October even as many of its members remain concerned that inflation is expected to rise through the remainder of 2025, said Michael Pearce, deputy chief US economist at Oxford Economics.
Even those who have emphasised the possible weakness in the job market agree the Fed should now move carefully.
The economy continues to throw off mixed signals, Powell said, with "bifurcated" consumers stressed at the low end of the income distribution but those at the upper end spending robustly, and economic growth buoyed by business investment even if that is not translating into strong job growth.
Inflation has not risen as strongly as initially expected on the back of the White House's new import taxes, but nevertheless has climbed from around 2.3 per cent in April to about 2.7 per cent in August, according to the last official estimate released for the Personal Consumption Expenditures Price Index before the shutdown.
The Fed uses the PCE to set its two per cent inflation target, and in projections issued in September policymakers expected it to rise to three per cent by the end of this year.
The Fed also announced on Wednesday that it will restart limited purchases of Treasury securities after money markets showed signs that liquidity was becoming scarce, a condition it has pledged to avoid.
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