U.S. Federal Reserve officials on Tuesday pushed back on market expectations and presidential pressure for the central bank to deliver a significant U.S. interest rate cut of half a percentage point as soon as its next meeting.

Chairman Jerome Powell defended the U.S. central bank's independence from U.S. President Donald Trump and financial markets, both of which seem to be pushing for aggressive rate cuts, in remarks at the Council on Foreign Relations in New York.

"The Fed is insulated from short-term political pressures," said Powell. Asked later about the possibility of disappointing markets by not delivering a cut, Powell added, "We're not in the business, really, of trying to work through short-term movements in financial conditions. We have to look through that."

But he said he and his colleagues are currently grappling with whether uncertainties around U.S. tariffs, Washington's conflict with trading partners and tame inflation require a rate cut.

Investors have long been anticipating rate cuts this year even as Fed policymakers had once suggested such a move would have been premature or even irresponsible in light of a strong labor market and lofty asset prices.

U.S. stock indexes dropped following Powell's remarks. The S&P 500 dropped 1 percent to 2,917, its biggest loss of the month, while the Dow Jones Industrial Average fell 179 points or 0.7 percent, to 26,548.

In addition to disappointment with the Fed comments, reports showing a drop in consumer confidence and weakness in the housing market added to investor gloom.

Powell is facing increasing anger from Trump, who nominated him for the job in late 2017.

The U.S. president, who has said as recently as this weekend that he has the power to demote Powell, said on Twitter on Monday that the Fed "doesn't know what it is doing," adding that it "raised rates far too fast" and "blew it" given low inflation and slowing global growth.

The U.S. Congress chose to insulate the Fed from political pressure "because it had seen the damage that often arises when policy bends to short-term political interests," Powell said in his speech.

"We're human. We'll make mistakes. I hope not frequently, but we'll make mistakes. But we won't make mistakes of integrity or character."

(With input from Reuters and AP)