The chief of the U.S. Federal Reserve has affirmed the Fed's plans to continue gradually increasing interest rates.

Federal Reserve Chairman Jerome Powell said on Tuesday that the Fed's interest rate-setting Federal Open Market Committee believes the best way is to keep gradually raising the federal funds rate. 

Powell was upbeat about the U.S. economy during his testimony to the Senate Banking Committee, noting that job creation remained strong and inflation was right around the Fed's two percent target. 

However, he acknowledged that it was "difficult to predict the ultimate outcome of current discussions over trade policy" in an apparent reference to the U.S.’ heavy tariffs imposed on products from China and many of the U.S.’ trading partners. 

Powell said that protectionism can hurt economic growth and potentially undermine wages, hinting at his disapproval of the Trump administration's trade policy.

He said that in general, countries that remain open to trade and haven't created barriers, including tariffs, have grown faster. In contrast, he said that nations that have taken a more protectionist direction have not fared as well.