MARKET REACTION:

STOCKS: The S&P 500 extended gains and was recently up 0.66%

BONDS: The U.S. Treasury 10-year yield tumbled and recently stood at around 4.08%, the lowest level since August. The 2-year yield fell and was recently at 4.537%, its lowest level since mid-June.

FOREX: The dollar index was down 0.5%

COMMENTS:

MICHAEL BROWN, MARKET ANALYST, TRADERX, LONDON

    "No surprise in terms of rates with the Fed funds rate remaining unchanged, though a marginally more dovish than expected dot plot doesn't exactly provide the pushback on market pricing and looser financial conditions that most had been expecting."

    "The economic assessment remains broadly unchanged with incoming data having done little to materially alter the outlook. Ultimately, while markets have undergone a knee-jerk dovish repricing, this is unlikely to be a game-changer in terms of the outlook, with the debate for 2024 still likely focusing on the reasoning for a cut (soft landing or growth slump?) over the magnitude of such a move."

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO

    "By raising the bar to further tightening and telegraphing at least three rate cuts in 2024, the Fed turned decisively dovish this afternoon, waving a red flag in front of market bulls hoping for an easing in policy."

    "Perhaps more importantly, officials appear convinced a "soft landing" is in the offing, with inflation subsiding, growth remaining strongly positive, and unemployment remaining essentially changed through the course of 2024. The conditions are in place for a melt-up in financial markets, and a further easing in credit conditions across the economy."

TOM MARTIN, SENIOR PORTFOLIO MANAGER, GLOBALT INVESTMENTS, ATLANTA

"The statement is telling us that the Fed is seeing what the markets have already started to discount, that you're going to have inflation back to normal without a recession."

"We kind of hoped it was going to be this, but we didn't really think it was. I think there was a lot more tacit expectation that at the least the statement and the dot plot weren't going to be quite this clear."

BRIAN JACOBSEN, CHIEF ECONOMIST, ANNEX WEALTH MANAGEMENT, MENOMONEE FALLS, WISCONSIN

"The FOMC is becoming a motley crew. The divide isn't so much about whether to cut in 2024, but rather how much and when. The Powell Pause may only last until the May meeting. The critical question is whether the Fed will be cutting because it can or because it has to. If the Fed is only tracking inflation lower, that's bullish, but the more likely scenario is that they cut because growth stalls and they have to cut."

(Compiled by the Global Finance & Markets Breaking News team)