The speed and timing of rate cuts is top of mind for both Washington and Wall Street as they try to game out the outlook for jobs, stocks and economic growth. The decision holds special political weight in this election year.

Stocks soared to record highs after the announcement that the Fed was still planning to cut rates this year even as the economy continues its surprising ascent.

At a press conference following the announcement, Fed Chair Jerome Powell said he’s still optimistic that prices will continue easing, despite hotter-than-expected inflation reports in both January and February. But he said he and his colleagues are comfortable keeping rates where they are until that trend is clearer.

Those two inflation reports “haven’t really changed the overall story, which is that of inflation moving down gradually on a sometimes-bumpy road toward 2 percent,” Powell told reporters. But, “I also don’t think that those readings added to anyone’s confidence” that rates should be lower, he added.

Powell repeatedly conveyed the message that the Fed is committed to returning inflation to 2 percent but that they don’t feel the need to unduly hurt the economy to get there more quickly.

“That is what will happen over time. We stress: over time,” he said. “We’re committed to that outcome and will bring it back.”

Investors have adjusted to the idea that there might be less of a drop in borrowing costs than they previously thought. JPMorgan economists initially projected five cuts for 2024 and are now only expecting three — one every other meeting starting in June. That’s relatively consistent with what others are pricing in, according to CME’s FedWatch Tool.

Fed officials are now projecting three rate cuts in each of the next three years, meaning that their main policy rate will still be above 3 percent at the end of 2026.

The Fed’s projection of where its policy rate will settle over the longer run also ticked up to 2.6 percent, a notable shift that underscores that borrowing costs will stay high for years to come.

The Minneapolis Fed noted in a paper last month that there is “a great deal of uncertainty around the level of interest rates in the long run.”

“After all, the United States and economies around the world are still recovering from the disruptions of the pandemic and the war,” according to that paper. “For instance, the implications of changes in working arrangements — such as a more common adoption of work-from-home practices — and reconfigurations of global value chains to increase production resilience have yet to fully play out.”

All of this means that borrowers who are getting most squeezed by higher rates — from lower-income Americans with credit card debt to commercial real estate mortgage holders — could continue to feel the pinch for a while.

Julia Pollak, chief economist at ZipRecruiter, said less vulnerable sectors should be fairly insulated because “so few have adjustable-rate debt and so many locked in low rates early in the pandemic.”

Consumer spending has also held up surprisingly well in the face of higher debt costs, having been cushioned by pandemic-era government aid as well as rising wages. Unemployment has been below 4 percent for two years.

But Randall Kroszner, who served on the Fed board from 2006 to 2009, said he still expects some pain from rates to hit the economy, with unemployment “moving up into the fours.”

The U.S. might still avoid recession, he said, but argued that markets may be too optimistic in how they see this all playing out.

“They seem to take a soft landing as awfully soft,” he said.