The Federal Reserve indicated its intention to reduce interest rates twice more this year, as Fed Chair Jerome Powell took on a seemingly dovish stance. This was a welcome surprise for investors who were anxious about "stagflation" and the potential for a US recession prior to the policy decision on Wednesday.

Dennis DeBusschere, president of 22V Research, described the outcome as a positive development for markets, as the Fed did not appear inclined to worsen the situation.

The decision was influenced by the Fed's belief that the inflation caused by tariffs would be temporary and have a one-time impact on price growth. This outlook, reflected in the central bank's projections, eased investors' concerns about persistently rising prices. However, some experts caution that this temporary inflation outlook may not be realistic and that the planned rate cuts could be affected by the Trump administration's fluctuating trade policies.

Uncertainty prevails following the decision, as stated by Rick Rieder, chief investment officer of global fixed income at BlackRock, emphasizing the need for the Fed to evaluate the situation based on data and time.

Moreover, concerns about a weakening labor market and economic slowdown could lead the Fed to lower rates, a move that may not be favored by investors seeking earnings growth and a robust economy.

Despite a slightly more cautious stance from the Fed, traders have adjusted their expectations regarding interest rates by the end of the year.