The 10-0 decision lifted the federal funds rate target to a range of 2.25 per cent to 2.5 per cent. For consumers, any hike in the rate has meant higher borrowing costs, including mortgage and credit card payments.
Trump has always been opposed to rising interest rates on the basis they might hamper economic growth, and has in the past called the Fed "crazy" and "loco" for doing so.
Walking a fine line between being overly optimistic and too pessimistic, the Federal Reserve bumped up its benchmark interest rate on Wednesday and said the United States economy remained strong, but it warned of possible headwinds next year and signaled it would tighten credit twice in 2019 rather than three times as it previously forecast.
"Nothing will deter us from doing what we think is the right thing to do", Powell said.
Stephen Innes, head of Asia-Pacific trade at Oanda, said the "Fed delivered a dovish hike, but clearly, there wasn't enough affirmation in the statement that the Fed was close to pausing or ending their interest rate hike cycle sooner than expected". But bond prices rose, sending yields lower.
After the Fed's announcement, Powell said Trump's tweets and statements would have no bearing on the central bank's policymaking.
"Williams' calming words just demonstrate that the stock market has an unhealthy addiction to monetary policy", Yardeni said.
The market swoon is coming even as the USA economy is on track to expand this year at the fastest pace in 13 years.
Also lurking are growing concerns about a slowdown in the global economy. Yet that's exactly what Powell and the Federal Open Market Committee voted to do at yesterday's monetary policy meeting. "We're going to do our jobs the way we've always done them", he said when asked about White House pressure. The question for the Federal Reserve chairman is whether humility plays well with the financial markets. But now, the risks of a surprise could rise. Next year, Powell will begin holding a news conference after each of the Fed's eight meetings each year, rather than only quarterly. This will allow him to explain any abrupt policy shifts. Markets also have to adjust to losing the predictable and ample liquidity support they received from the European Central Bank (ECB).
While the Nasdaq came within a whisker of bear market territory on Thursday, other segments of the market, including the Russell 2000 small-cap benchmark and the Dow Jones Transport Average are already in bear market territory. They're also concerned about the trade dispute between the USA and China, which threatens economic growth and corporate profits. Over the past year, the 30-year mortgage rate has climbed from 3.95 percent to a peak of almost 5 percent in November - a seven-year high. As I've mentioned, most of my colleagues expect the economy to continue to perform well in the coming year.
However, there are fears that conditions could turn tougher next year as the fiscal boost from Mr Trump's spending and tax cut package fades and the global economy slows.
Fed funds futures are now pricing in only about 50 percent chance of one rate hike.
The Fed also made a widely expected technical adjustment, raising the rate it pays on banks' excess reserves by just 20 basis points to give it better control over the policy rate and keep it within the targeted range.
Treasury yields slid and the dollar erased losses as Powell said the Fed's balance sheet normalisation would continue "on automatic pilot".
"The really important message is the economy is strong". But it did note potential threats by adding language to say it would monitor global developments and assess their impact on the economy.
Wednesday's rate increase, the fourth of the year, pushed the central bank's key overnight lending rate to a range of 2.25 per cent to 2.50 per cent. It predicts 2 per cent growth in 2020.
According to Federal Reserve Chairman Jerome Powell, the world's largest economy continued to strengthen this year, roughly in line with expectations. But this time, risks to the economy appear to be rising. Economies in Europe and China are slowing.