Federal Reserve Chair Jerome Powell said policymakers expect to deliver a "couple" more interest-rate increases before putting their aggressive tightening campaign on hold, even as they slowed their drive to curb inflation.
Powell and his colleagues lifted the Fed's target for its benchmark rate by a quarter percentage point to a range of 4.5pc to 4.75pc. The smaller move followed a half-point increase in December and four jumbo-sized 75 basis-point hikes prior to that.
Still, investors took heart from the chair's remarks acknowledging that price pressures have started to ease, despite his emphasis on the Fed's outlook for more rate hikes. The S&P 500 closed more than 1pc higher after he spoke and two-year yields fell sharply.
"We think we've covered a lot of ground," Powell told reporters after the meeting. "Even so, we have more work to do."
The vote by the Federal Open Market Committee was unanimous.
"The committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2pc over time," the Fed said in a statement issued after the two-day policymaking meeting, repeating language it has used in previous communications.
In a sign that the end of the hiking cycle may be in sight, the committee said the "extent of future increases" in rates will depend on a number of factors including cumulative tightening of monetary policy. It had previously tied the "pace" of future increases to those factors.
Powell, during his press conference, added to that sense.
"We've raised rates four and a half percentage points, and we're talking about a couple of more rate hikes to get to that level we think is appropriately restrictive," he said.
In another shift from its last statement, the Fed noted that inflation "has eased somewhat but remains elevated," suggesting policymakers are growing more confident that price pressures have peaked.
That compares with prior language where officials simply stated price growth was "elevated."
Investors wanted to know if Powell would push back against market expectations that the Fed will cut rates later in the year as inflation eases and economic growth slows. He did.
"Restoring price stability will likely require maintaining a restrictive stance for some time," he told reporters. While recent readings on price pressures were encouraging, he added that "I just don't see us cutting rates this year," if the economy evolves as he and his colleagues expect.
At their prior meeting in December, 17 of 19 policymakers forecast that they'll increase rates to 5pc or above this year, with none looking for cuts.
There were no fresh forecasts published on Wednesday, but Powell did reference those projections as a guide about how much higher officials expect to raise rates.
After initially dismissing a surge in prices as temporary, Fed policymakers have been scrambling to get control of runaway inflation before it becomes embedded into the economy, lifting rates sharply from levels close to zero as recently as a year ago.
They're also reducing the Fed's balance sheet at a record clip, withdrawing hundreds of billions of dollars from the financial system.