The Street didn’t get exactly what it was looking for from Powell, though. The Fed chair did reiterate that interest rates are “likely” at their “peak for this tightening cycle” in prepared remarks, but he also expressed caution about the economic outlook and made it clear the Fed’s policy stance can change as new data comes in. And as for that rate cut: it isn’t here yet.

“If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” he wrote in his prepared testimony. “But the economic outlook is uncertain, and ongoing progress toward our 2 percent inflation objective is not assured.”

Powell warned that cutting interest rates “too soon or too much” could cause inflation to reignite, forcing him to hike rates even higher than planned. But by the same token, he noted that cutting rates “too late or too little” could slow economic growth and damage the labor market.

The speech was pretty much a rehash of the Fed chair’s recent public statements. But David Russell, global head of market strategy at TradeStation, argued that “no news is good news” when it comes to the Fed, given that Powell has repeatedly hinted that rate cuts are coming this year. 

“We’re still in wait-and-see mode, but at least there’s a broad consensus about where we’re going. Higher rates are becoming less of a danger,” he said in an emailed statement.

Stocks responded positively to Powell’s rehashed comments, with the S&P 500 rising 0.8% by 1:00 pm ET, and the tech-heavy Nasdaq jumping 1%. But the reaction was muted, given that investors are waiting to look through Powell’s exchange with the Senate today and the House Representatives tomorrow.

Still, one thing was made clear: while many investors were pricing in March interest rate cuts just months ago, solid economic growth, strong jobs data, and higher-than-expected core inflation figures have left that outcome off the table. “Given the Fed’s extreme data dependence…the odds now clearly favor a June onset of the policy easing cycle,” EY chief economist Gregory Daco said in an emailed statement. 

Daco believes the odds of a May interest rate cut dropped to just 20% after Powell’s testimony, but he still argues the Fed will ultimately cut rates by 1 percentage point this year, which would leave the Fed funds rate in a range of 4.25% to 4.5%.

Andrew Hunter, deputy chief U.S. economist at Capital Economics, echoed Daco’s comments in a Wednesday note, arguing that the recent rise in core inflation “will prove to be noise.” Hunter also believes that wage growth, which the Fed has been attempting to control in order to prevent a resurgence of inflation, will “remain on a downward trend.”

“The upshot is that we still see the first rate cut coming in June and scope for rates to then be lowered a bit more quickly than markets are pricing in,” he argued.