Federal Reserve Chair Jerome Powell was careful not to tip the central bank’s hand when discussing the path forward for interest rates.
"Slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more," Powell said in a press conference on Wednesday after the Fed decided to hold rates steady for a second consecutive meeting.
Markets haven't been so wishy-washy. Treasury yields, which often hit a high around the same time that the fed funds rate peaks, hit their lowest levels in two weeks on Thursday. The tech-heavy Nasdaq Composite (^IXIC), which usually lags when fears of further tightening persist, is up more than 1% for the second straight day.
And direct bets on the Fed's path are increasingly leaning toward no more hikes, too. The CME FedWatch Tool now projects a 80% chance the Federal Reserve doesn't raise rates again this year, up from a 54% chance a month ago.
"Certainly it's a scenario that we could get more rate hikes, but I think the most likely scenario is that we are done," Moody's Analytics chief economist Mark Zandi told Yahoo Finance Live on Wednesday after Powell's press conference sent stocks rallying into the market close. "And I think today's market action would suggest that now is the consensus view."
In September, the Fed's Summary of Economic Projections, including its "dot plot," showed the majority of committee members believed the central bank would need to raise rates one more time in 2023. That combined with Powell's emphasis that interest rates would need to stay elevated for an extended period of time sent markets into a tizzy.
But when asked directly about the projections made in the dot plot on Wednesday, Powell didn't commit to another hike. Instead, he chose to downplay the dot plot's usefulness.
"That’s not like a plan that anybody’s agreed to or that we will do," Powell said. "That’s a forecast that would change ... So I think the efficacy of the dot plot probably decays over the three-month period between that meeting and the next meeting."
Stocks tracked higher during that part of Powell's press conference and have rallied since. While not a direct answer, it hinted at a core component of what has been driving the market action over the last month: uncertainty.
Wall Street strategists have highlighted to Yahoo Finance that the key to calming the increased volatility in the market would be a more certain outlook on what could come next from the Fed.
While Powell wasn't so explicit, the market was in terms of what it thinks is next. The interest rate sensitive two-year Treasury yield moved lower after Wednesday's Fed decision.
"The market is interpreting the statement as the Fed likely being done with rate hikes this cycle," Charles Schwab strategist Kathy Jones wrote on X.
Josh Schafer is a reporter for Yahoo Finance.