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(Bloomberg) -- To the traders who have been piling into the US bond market, the Federal Reserve delivered a message they’d been waiting to hear: US growth will likely slow, any increase in inflation should be brief, and interest rates will probably come down more before the year is out.

Even as Chair Jerome Powell largely swatted away the recession worries that have shadowed Wall Street — fueling a stock market rally during his press conference Wednesday — short-term Treasury yields also slid as he underscored the uncertainty behind the outlook.

Bond investors seized on the fact that the central bank dialed back its growth forecasts for this year, validating some of the concerns that President Donald Trump’s trade war and spending cuts will cool the economy. And that supported speculation that the Fed will cut interest rates twice in 2025, as policymakers indicated with their latest projections.

“What the Treasury market honed in on is that this seemed to be more tilted or skewed toward growth uncertainty rather than longer-term inflation uncertainty,” said Kevin Flanagan, head of fixed income strategy at Wisdom Tree. “And the fact Powell said ‘tariffs are transitory’ underscores the point.”

The central bank’s meeting came on the heels of a tumultuous few weeks on Wall Street as investors recalibrated expectations amid growing speculation that Trump’s policies will slow the economy. On Wednesday, however, Powell repeatedly pointed to signs that the underlying economy remained strong — while also saying that the central bank stood ready to start cutting interest rates again if the job market deteriorates.

Two-year Treasury notes, which are sensitive to changes in expectations for US monetary policy, led the bond market’s advance, driving the yield down some 7 basis points to 3.97%. The 10-year yield was down 4 points at 4.25%.

The moves came alongside a jump in the equity market that drove the S&P 500 Index up more than 1%, marking the strongest gains in stocks and bonds on a Fed meeting day since July, when Powell telegraphed the rate cuts that started at the September meeting.

This time, however, bond investors narrowed in on the uncertainty that Powell pointed to in the economy.

While the Fed chief said just a few weeks ago that “the economy’s fine” and didn’t need help from the Fed, he told reporters Wednesday that “uncertainty today is unusually elevated” even as he said the central bank is in no rush to start easing policy again. He also said that any inflation impacts from Trump’s tariffs are likely to prove temporary.

“What jumped out to me from Powell was that he was kind of going along with the narrative that there would be this one time price increase from tariffs,” said Marta Norton, chief investment strategist at Empower, which oversees $1.8 trillion in assets.

Traders continued to price in that the Fed will enact two quarter-point rate cuts by the end of the year, with roughly 50% odds of a third such move.

Yet there’s some doubt on whether the Fed will cut that much, given the forecasts from individual policymakers in the so-called dot plot, which showed that several are predicting just one or zero reductions. BlackRock Investment Institute said the US central bank may find it difficult to cut more than once or twice this year.

The distribution change amounted to a “hawkish kind of tone for the Fed,” Diane Swonk, chief economist at KPMG, said on Bloomberg Television. “The number of people who are expecting one rate cut or less this year is going up — that gives you that sense of the dispersion of risk and the challenge of corralling the cats in that uncertain environment.”

--With assistance from Marquis Emmerson and Kristine Aquino.

(Updates with views from BlackRock Investment Institute.)