For many on Wall Street, Jerome Powell did not deliver the "hawkish hold" that investors expected, sparking a stock and bond rally. While he did not rule out another rate hike, the market now believes the Fed is done.
Traders were encouraged after Powell stated that the current tightening cycle has progressed significantly and that officials are "proceeding carefully." The S&P 500 was trading near session highs, up more than 1%. Ten-year US interest rates fell 18 basis points to 4.75%, owing to the Treasury's plans to slow the rate of increase in long-term debt sales. Swaps for January show a peak rate of 5.41%, which equates to only eight basis points more hikes.
Another pertinent aspect of the Fed statement and Powell's subsequent remarks was the mention of the impact of the recent surge in Treasury yields - and how that will affect monetary policy in the future.
The perception is that the massive increase in longer-term rates has effectively completed some of the tightening work that the Fed has been attempting.
The decision kept the benchmark federal funds rate target range unchanged at 5.25% to 5.5%, the highest since 2001, as part of a strategy to slow the pace of rate increases as the Fed nears the end of its tightening campaign. One change was to change their description of the rate of economic growth from "solid" to "strong" to reflect better economic data released since their September meeting.