Fed Chair Jerome Powell strikes a new optimistic tone as he points to falling inflation and says that he thinks we can avoid a recession

“We can now say I think for the first time that the disinflationary process has started,” he told reporters, adding that he expects U.S. economic growth to be positive this year, even if it falls to a “subdued pace.”

Fed officials are usually careful to never make big, explicit recession predictions, but past press conferences from Chair Powell often included language meant to cap investor enthusiasm and temper expectations—in one famous example, he warned the Fed was ready to “bring some pain” to households and businesses. But this time was different.

Although the Fed raised interest rates by 25 basis points on Wednesday, marking the eighth rate hike in under a year, BMO Wealth Management’s chief investment strategist Yung-Yu Ma,  said that the Fed chair’s statements show that “peak hawkishness” is behind us and “the ingredients for a soft landing are falling into place.”

“Chairman Powell showed the last of his cards and indicated that he believes in a path to getting inflation down to 2% without a significant economic decline or significant increase in unemployment,” Ma told Fortune.

And Charlie Ripley, senior investment strategist for Allianz Investment Management, argued that Powell’s comments are evidence that the end of interest rate hikes are “on the horizon.”

“Slowing the pace of rate hikes is a clear sign that the Fed is getting comfortable with the idea that the prescribed policy for the economy is finally starting to work,” he told Fortune.

The S&P 500 ended Wednesday up over 1% after Powell’s speech, with the tech-heavy Nasdaq rising 2%. The Euro also soared against the U.S. dollar, in a sign that investors viewed Powell’s comments as dovish. 

David Keller, chief market strategist at Stockcharts.com, a technical analysis platform, told Fortune that stock market investors viewed Powell’s statements as a confirmation that the Fed’s interest rate hikes are “starting to have a real impact on inflation,” leading many to price in a “soft landing with no recession.”

Despite his upbeat tone, Powell said that further interest rate increases are still appropriate, with the Fed funds rate most likely peaking at a range of 5.00% and 5.25% this year. And he added that he doesn’t expect to cut interest rates this year because year-over-year inflation is still “running very hot.”

“It would be very premature to declare victory, or to think that we’ve really got this,” he said. 

“We’ve raised rates four and a half percentage points, and we’re talking about a couple more rate hikes to get to that level we think is appropriately restrictive.”

But despite Powell’s careful hedging, some investors came away feeling bullish. Jay Hatfield, CEO at Infrastructure Capital Advisors, told Fortune that he expects the Fed chair will pause rate hikes this year as inflation fades faster than expected—and that will enable stocks to rise.

“We continue to project that the S&P end the year above 4,500 driven by the Fed pausing rate increase after the May meeting and the economy proving to be resilient due to post Pandemic tailwinds,” he said.

Not everyone took Powell’s relatively positive press conference performance to heart, though. Ronald Temple, chief market strategist at Lazard, warned that investors’ reaction to Powell’s speech may be overly optimistic.

“I believe markets remain too dovish regarding how high rates will go and how long they will stay there. The more markets resist the Fed, the tighter conditions will have to be to tame inflation,” he told Fortune.