The Committee decided to maintain the target range for the Fed funds rate at 4.25-4.50% at the January meeting; the decision was unanimous, OCBC's FX Frances Cheung and Christopher Wong analysts note.

Current monetary policy is 'meaningfully above the neutral rate'

"The Statement was seen as carrying a hawkish tilt on two fronts: 1/It dropped the reference that 'inflation has made progress towards the Committee’s 2 percent objective'; and 2/ it also dropped the assessment that 'the labor market conditions have generally eased'. Powell sounded more dovish at the post-meeting press conference, saying the economy is strong overall, and 'has made significant progress towards our goals over the past two years'."

"Indeed, the progress has been there for a long time, and we do not read too much into the shortening of that phrase in the statement, which was 'a little language cleanup' as how Powell described it. That said, stabilization in the labor market conditions reduces the urgency to ease policy rapidly. Powell opined 'we do not need to be in a hurry to adjust our policy stances', but 'reducing policy constraint too slowly or too little could unduly weaken economic activity and employment'."

"On balance, the case for a March cut is not close yet, in our view. First, Powell said the current monetary policy stance is 'meaningfully above the neutral rate'; second, the favorable base effect for CPI may result in some downside surprises for Q1 readings."