-- Goldman Sachs economists said Wednesday they continue to expect two rate cuts this year following a “mostly uneventful but dovish” Federal Open Market Committee (FOMC) meeting.

“While the Committee added a hawkish acknowledgment of the “lack of further progress” on inflation so far this year to its statement, Chair Powell offered a dovish message in his press conference,” economists led by Jan Hatzius said in a note.

"We have left our forecast unchanged and continue to expect two rate cuts this year in July and November,” they added.

Economists said the most noteworthy aspect of Powell’s speech was his strong pushback against the idea of interest rate hikes. 

The Fed Chair stated that an increase in policy rates seems "unlikely" and expressed confidence that the current policy settings are sufficiently restrictive. 

Moreover, he indicated that the Federal Reserve would need convincing evidence of insufficient restrictiveness to consider rate hikes, evidence which is currently absent. 

Should inflation progress stall, Powell suggested that the FOMC's response would likely be to delay any planned rate cuts rather than to increase rates, setting a high threshold for any potential hikes, Goldman highlighted.

“Powell offered no major clues on the timing of a rate cut but struck a consistently dovish tone on inflation,” said economists. 

Echoing views held by Goldman Sachs, Powell downplayed the significance of the inflation rise in the first quarter and noted ongoing wage growth and the lack of signs pointing to an overheating economy. 

Furthermore, he noted that inflation expectations remain stable and underscored the time delays inherent in the inflation process. 

Powell also expressed optimism that declining housing costs and ongoing improvements on the supply side will continue to exert downward pressure on inflation, projecting a decrease in inflation rates throughout the year.

“Powell said his forecast is that overall inflation will move back down this year, though he acknowledged that his confidence was lower than it was before because of the upside surprise in recent months,” economists wrote.

“Finally, in response to a question about how the November elections affect the Fed’s ability to cut at upcoming meetings, Powell was adamant that the elections will not influence the FOMC’s decisions,” they continued.