Wall Street Reacts To "Neutral" Fed Hold

The digital ink on  the Fed statement is still wet and the kneejerk reactions are already flying. Here is a small sample of the more notable ones, with opinions ranging from this was a dovish, neutral and hawkish statement. So right in the middle, perhaps as Powell intended:

• George Goncalves, MUFG: "this is a “neutral” statement from the FOMC.The statement tweaks are an attempt at trying to avoid sending any signals while conveying they are on guard for any growth shocks and inflation spillover from the Middle East Conflict.”
• Sue Hill, Federated Hermes: "the focus will remain on the Fed’s expectations for inflation and growth given the runup in oil prices. While Chair Powell may officially convey that it’s too soon to tell what the impact will be, we’ll see hints of the Fed’s thinking in any revisions to the summary of economic projections and the dot plot."
• Ira Jersey, Bloomberg Intelligence: "Somewhat less obvious in the statement about Middle East led-uncertainty, but the higher inflation expectations in the SEP are certainly a sign the Fed is more concerned about current oil inflation, and less about next year. So a level shift is more or less built into their forecasts. Given how little the statement and most of the SEP changed, we’ll have to wait to hear from Powell for the market to digest about the committee’s reaction function, as a lot of questions are likely to be asked about oil."
• David Russell, Tradestation: "The dovish camp is fading as stagflation takes hold. The Fed isn’t panicking about the Iran war yet, but the higher inflation estimate shows they’re ready to get more hawkish if needed. Policymakers are watching both sides of the mandate, but price stability is getting more important."
• Brian Jacobsen, Annex Wealth Management: "They’re only guessing about what will happen with oil prices, but inflation is projected to run 0.3 percentage points hotter without a material drag on growth. That could be optimistic on their part. It’s similar to how they overestimated the effect of tariffs on inflation and underestimated the growth drag. 2026 could be like the last two years where there’s a shock, they end up being surprised, and they cut in September."
• Richard Clarida, Pimco:"The outcome is dovish constructive.AI is a support to demand in the economy that, to some extent, along with the BBB tax cuts, could probably offset the drag that would come from the oil price increases.  "
• Neil Dutta, Renaissance Macro: “Waller did not dissent. I think that is notable. He understands the value of his dissent.” 
• Peter Boockvar, One Point BFG Wealth Partners: “In light of everything going on in the Middle East and the global ripple effects, the FOMC could not have crafted a more non-event statement that was essentially little changed with the January meeting while adding this line, ‘The implications of developments in the Middle East for the US economy are uncertain."
• Molly Brooks, TD Securities: “The market reaction hinges on Powell’s press conference as we haven’t received much new information from,” the statement and updated SEP that also saw the long-run dot nudged up to 3.1%. Markets are looking closer at the unchanged median dots for 2026, 2027 and 2028 rather than the long-run dot given the uncertainty around the near-term impacts from the conflict in the Middle East.”
• Art Hogan, B. Riley Wealth: “All in, a slightly less hawkish decision than had been anticipated.”
• Lindsay Rosner, Goldman Sachs Asset Management: "Despite higher inflation forecasts, the FOMC retains an easing bias.
  We still see room for two ‘normalization’ cuts in 2026, although their timing remains dependent on the length of the conflict."
• Daniel Siluk, Janus Henderson Investors: “Overall: The Fed affirmed patience, acknowledged geopolitical uncertainty, and resisted a more hawkish pivot even with firmer inflation projections, likely a relief for markets already tightened by recent volatility.”
• Bob Michele, JP Morgan: “gobsmacked by the Fed’s decision because it implies that despite everything going on in the Middle East, the economy will still accelerate while employment will stay stable. I just don’t see that. I think there is a real impact to inflation and ultimately to the economy and the labor market."
• Christopher Hodge, Natixis: “The increase in inflation projections while maintaining one cut conveys a slightly dovish signal, but we should not over read this as incoming data and ongoing developments of war could change the narrative quickly.”

And now we wait to see what Powell will say in the Q&A.