Federal Reserve Chairman Jerome Powell’s comments yesterday signaled that the central bank probably won’t lift interest rate hikes for the foreseeable future. The statements are sending stocks up today. Investors were also likely pleased by the Fed’s decision to drastically lower the amount by which it reduces its bond holdings each month.

The chairman said he believes that the central bank’s next change to its benchmark interest rate probably will not be an increase. He added that, in order to raise rates, the Fed would have to believe that its current positions cannot lower inflation to its 2% goal in the long term. “That’s not what we’re seeing,” he stated.

The Fed Will Slow the Pace of Its Bond Cutbacks

For nearly two years, the Fed has reduced the amount of Treasury bonds and mortgage-backed securities that it owns by “up to $60 billion… and up to $35 billion” per month, respectively. The central bank has done this by not using the money that it obtains from its maturing bonds to buy new ones.

Beginning next month, the Fed will only reduce its holdings of Treasurys by $25 billion. That change is likely to put significant downward pressure on Treasury rates, which, in turn, determine borrowing costs throughout much of the economy.

The U.S. Treasury Launches a Buyback Program

Another factor that could be pushing stocks up today is the U.S. Treasury’s decision to launch a buyback program. Under the initiative, the department will conduct weekly repurchases of $2 billion of regular Treasurys and as much as $500 million of Treasury Inflation-Protected Securities, or TIPS.

These repurchases will also probably push down Treasury rates, thus lowering borrowing rates throughout the economy.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.