Fed meeting recap: Powell says central bank is in no hurry to cut rates again

There is a wide range of possibilities when it comes to the potential effects of tariffs, according to Fed Chair Powell.

"The range of possibilities is very, very wide," he said. "We don't know for how long or how much, what countries. We don't know about retaliation. We don't know how it's going to transmit through the economy to consumers. That really does remain to be seen."

"The best we can do is what we've done, which is study up on this and look at the historical experience, read the literature and think about the factors that might matter," Powell continued. "And then we'll just have to see … how it goes."

— Sean Conlon

Fed Chair Powell said Wednesday that he has had "no contact" with Trump since the president said last week that he would "demand that interest rates drop immediately."

"I'm not going to have any response or comment whatsoever on what the president said," Powell said at his press conference on Wednesday. "It's not appropriate for me to do so."

"The public should be confident that we will continue to do our work as we always have, focusing on using our tools to achieve our goals and really keeping our heads down and doing our work," Powell added.

Read more about Powell's comments from CNBC's Jesse Pound here.

— Darla Mercado

Fed Chair Powell said Wednesday that the central bank will need to see "real progress on inflation or some weakness in the labor market before we consider making adjustments."

The Fed kept rates unchanged in January after three straight meetings that ended in cuts.

— Fred Imbert

Fed Chair Powell reiterated the central bank's commitment to achieving a 2% inflation rate.

When discussing the Federal Open Market Committee's plans to conduct a new review on its monetary policy framework this year, Powell said its inflation target is not subject to change.

"The committee's 2% inflation goal will be retained and will not be a focus of the review," Powell told reporters Wednesday.

— Hakyung Kim

Fed Chair Powell said Wednesday that the central bank was not rushing to change its current course on its monetary policy framework.

"With our policy stance significantly less restrictive than it had been, and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance," he said.

— Brian Evans

President Donald Trump's return to the White House could have more sway on Fed officials to cut interest rates than some believe, according to Christopher Rupkey, chief economist at FWDBONDS.

The central bank announced Wednesday that it would hold interest rates steady. But looking ahead, Rupkey said the presence of Trump, who has previously criticized Fed Chair Jerome Powell, could pressure policymakers to further lower those levels.

"The 800 pound gorilla in the room with policymakers is the President," Rupkey said, adding that one senior Fed official has already resigned to avoid clashing with Trump.

"The markets would be wrong to bet against additional Fed interest rate cuts this year simply because the President wants to see lower interest rates," Rupkey said. "At the moment, he appears to be getting his way."

— Alex Harring

The Fed's decision to hold rates steady on Wednesday was expected, but it does appear to have spurred traders to lower their expectations for rate cuts the rest of the year.

Shortly after 2 p.m. ET, data from the CME FedWatch Tool showed that the fed funds futures market was pricing in a roughly 12% likelihood for no cuts this year, and 31% likelihood for one cut. Both of those numbers are slightly higher than they were Wednesday morning.

— Jesse Pound

The Federal Reserve has entered a wait-and-see mode on inflation, according to Lindsay Rosner, head of multisector fixed income investing at Goldman Sachs Asset Management.

"Pressing the pause button. The New Year saw the Fed entering a 'new phase' of its easing cycle, with strong growth and resilient labor market data providing scope for a more patient approach amid elevated data and policy uncertainty," Rosner wrote.

"While we continue to think the Fed's easing cycle has not yet run its course, 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."

— Sarah Min

The major averages fell further after the Federal Reserve issued its rate decision. Policymakers opted to keep rates steady, but flagged that inflation remains "somewhat elevated."

At around 2:12 p.m., the S&P 500 was down 0.8%, while the Dow Jones Industrial Average was off more than 200 points, or 0.5%. The Nasdaq Composite was down 1.1%.

Treasury yields also jumped to their session highs. The 2-year rose to 4.253%, while the 10-year climbed to 4.589%.

— Darla Mercado, Gina Francolla

The Federal Open Market Committee left a phrase out of its January statement that may be a bigger signal to markets than what the committee kept in.

The latest statement says "inflation remains somewhat elevated." December's version of that sentence was longer, reading "inflation has made progress toward the Committee's 2 percent objective but remains somewhat elevated."

That change could be part of the justification for the Fed pausing after three straight rate cuts.

— Jesse Pound

The policy-setting Federal Open Market Committee kept a steady hand on interest rates, sticking to its target range of 4.25% to 4.50%.

The action comes after policymakers trimmed rates three times in a row last year.

Read about the Fed's decision from CNBC's Jeff Cox here.

— Darla Mercado

The major averages took a leg lower shortly after 1 p.m. ET, with the Federal Reserve's rate decision looming.

At 1:20 p.m., the S&P 500 was down about 0.5%, while the Nasdaq Composite slipped 0.9%. The Dow Jones Industrial Average was off by around 72 points, or roughly 0.2%.

The 10-year Treasury note yield was little changed at about 4.55%. The rate on the 2-year Treasury was up less than a basis point at 4.21%.

— Darla Mercado

The Federal Reserve's moves on interest rates have an effect on what investors earn, particularly on fixed income and cash. Higher rates have led to higher yields on interest-bearing instruments.

To that end, now might be a good time to take a closer look at your cash holdings, said Brandon King, head of personal investor cash at Vanguard.

"From an investment perspective, make sure your cash allocation aligns with your investment goals, time horizon and risk tolerance, rebalancing as needed," he said.

Investors should also make sure they are maximizing the interest they earn on emergency funds, shopping around for attractive alternatives. "The industry average savings account is offering just 0.41% APY," he said. "That means you'll only earn 41 cents annually for every $100 saved."

Certain high-yield certificates of deposit and savings accounts, as well as money market funds, are offering yields exceeding 4%, and those deals may stick around a little longer as the Fed takes a slower approach on rate cuts.

— Darla Mercado

As the Federal Reserve readies its rate decision, Chair Jerome Powell's press conference will likely be the main event of the day.

The Fed is expected to stand pat on interest rates, maintaining its benchmark rate in a target range of 4.25% to 4.50%. Policymakers will issue their decision at 2 p.m. ET.

Powell speaks at 2:30 p.m., and investors will eagerly await further details on the next direction for policy, as well as whether the Fed chair has anything to say in response to President Donald Trump's call for lower rates.

Though the president has no authority over how the Fed proceeds on policy, he and Powell have butted heads on policy since Trump's first term in Washington. Just last week, Trump said he would "demand that interest rates drop immediately."

Read more about what's ahead for the Fed from CNBC's Jeff Cox here.

— Darla Mercado