However, policymakers are maintaining a hawkish outlook, with Mr Powell saying the fight to slow rapid inflation is not yet over.
In an effort to do more to restrain the economy, the Fed signalled it would keep rates higher through next year.
“I wouldn’t see us considering rate cuts until the committee is confident that inflation is moving down to 2 per cent in a sustained way,” Mr Powell said.
The median forecast for the policy rate by the end of next year is now 5.1 per cent, up from the 4.6 per cent peak projected in September. Inflation is also expected to remain elevated.
Mr Ryan said investors are not surprised by Mr Powell’s hawkish message.
“(Powell) wanted to shift the narrative from some of the good disinflation and deflation that we have seen recently, as separate from what they see as the portion of inflation that is most important to them – which is core services inflation, excluding housing, and that depends on the labour market and on wage growth,” Mr Ryan said.
EFFECTS OF RATE HIKES
Mr Ryan said that one of the immediate effects stemming from the tightening policies was a cooling of the housing market, as outlined by Mr Powell in his post-meeting press conference.
Observers have seen a sharp decline in housing transactions and existing home sales, with mortgage rates rising more than 400 basis points alongside the Fed funds tightening.
Prices are likely to continue to cool in the housing market, he added.
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