"They see an opening for no recession and a soft landing, and they think that is a risk they are willing to take."

In his Jackson Hole speech, Powell noted that the Fed is making progress in slowing price gains but stressed that its job fighting inflation isn't done.

The Fed's benchmark federal funds rate is now 5.25% to 5.5%.

In December, inflation cooled to the slowest rate of increase in more than a year, leading some to think the Fed will raise interest rates by just 25 bps late this month.

Chair Powell says today's expected half-point interest rate increase is not close to the end of the road in the continuing battle against inflation.

They foresee slowing the pace of rate hikes in the near, while emphasizing that a 50 bps increase next month would still be significant.

Persistent high inflation may lead the Fed to keep up the regular rate hikes till the fed funds rate reaches 5.5%.

The latest Bloomberg economist survey expects another 75 bps rate hike next week, and additional increases bringing rates to 4% by year-end.