Coming into today's FOMC meeting, consensus was that the Fed would unveil a dovish pause, instead what the Fed revealed was much more hawkish than many expected.

Below is a snapshot of some of the initial kneejerk reactions by Wall Street strategists and analysts.

Lindsay Rosner, Goldman Sachs Asset Management:

This is a new phase of the Fed’s easing cycle, given the strong growth and resilient labor market data providing scope for a more patient approach amid elevated data and policy uncertainty. The Fed’s easing cycle has not yet run its course, but the FOMC will want to see further progress in the inflation data to deliver the next rate cut highlighted by the fact they removed the reference on inflation making progress.

David Russell, Head of Market Strategy at TradeStation

The statement was a little hawkish, but policymakers are on hold with a long break until the March meeting. Data between now and then will set the tone for that next big decision. Today’s meeting is a non-event for Fed watchers. The central bank wants to be less of a factor over the next month as Trump takes the spotlight.

Ira Jersey, Bloomberg Intelligence US interest rate strategist

The Fed’s statement was somewhat hawkish relative to last month, so it isn’t surprising that the knee-jerk reaction was for some modest bear flattening (something we noted might occur in our preview)

Neil Dutta, Renaissance Macro

This press statement makes clear that the dominating risk is a passive tightening of monetary policy. The Fed is remarkably complacent. I don’t agree with their economic outlook. Housing is a mess and wage growth is slowing. Core inflation is likely to ease in the months ahead as rental disinflation comes more into focus.

Steve Chiavarone, Federated Hermes

The statement is a tad hawkish, especially with the softer-than-expected PPI and CPI this past month. The key here is Powell’s tone during the press conference. The problem with this Fed is that they have been backward looking. They are simply reflecting the inflation data of Q4 (which was hotter), rather than on focusing on the softer data more recently and a downward trajectory likely on inflation in the coming months. This means they are adding to volatility rather than dampening it at this point.

Ali Jaffery, CIBC Capital Markets

While Trump administration policies aren’t in the statement, they do add to arguments for holding off on rate changes for now. Uncertainty around trade policy has likely increased with repeated threats to Canada, Mexico and others. All of this adds to up to a Fed that is in ‘wait-and-see’ mode. We expect that to be part of Powell’s message today.

Seema Shah, Principal Asset Management.

Keeping policy rates on hold until a clear direction starts to emerge is sensible. But make no mistake, if next month brings a second consecutive soft inflation print, coupled with a slight weakening in jobs growth, we may start to hear a renewed dovish tone to Fedspeak, with near-term rate cuts back on the table.

Anna Wong and Stuart Paul, Bloomberg Economics

The rate hold was widely anticipated. More notable were hawkish edits to the statement – removing an acknowledgment that inflation had made progress toward the 2% target, and saying the unemployment rate has stabilized – that appear intended to signal the pause could be an extended one. That said, our baseline is for the Fed to deliver three rate 25-basis-point rate cuts this year – more than the 50 bps of total cuts the median FOMC member anticipates – as we expect the labor market to be weaker than the Fed projects. However, we think risks to this view are skewed toward the Fed remaining on hold for longer, or cutting fewer times this year.

David Rosenberg, Rosenberg Research

We think the Fed is going to end up being on the wrong side of the forecast. Job gains are far less ‘strong’ than has been characterized in this statement. All these job gains are in part-time employment and hiring rates have absolutely plummeted. The backlog of continuing claims has been on a discernible upward path and the consumer surveys have revealed a substantial loss in labor market confidence.

Source: Bloomberg