The Fed, in a statement released after its two-day policy meeting, offered nothing to dispel market expectations that it will deliver its second rate increase of the year when it meets in June.
Analysts at ING said the market moves "may reflect a hint of disappointment that the Fed were not more upbeat on the economy and the threat of inflation".
USA stocks fell on Wednesday as investors digested a statement from the Federal Reserve, which left interest rates steady and said inflation had "moved close" to its target, while the dollar climbed late against a basket of currencies.
"Inflation on a 12-month basis is expected to run near the committee's symmetric 2% objective over the medium term", the statement said.
Markit themselves called the activity growth "subdued", admitting it was unlikely to persuade investors that the Bank of England (BoE) will move to raise interest rates at next week's Monetary Policy Committee meeting.
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"To be fair, the US economy has historically experienced weaker growth at the start of a new year as consumers front-load spending into Q4 amid the holiday season", Piegza wrote.
"Recent data suggest that growth of household spending moderated from its strong fourth-quarter pace while business fixed investment continued to grow strongly", the Fed added.
Although economic growth slowed to an annualized rate of 2.3 percent in the first quarter, a period that has tended to be weaker in recent years, and job gains cooled in March, a pickup is expected in the months ahead, fueled in part by the Trump administration's tax cuts and fiscal stimulus.
The predictable thing is that rates are raised in US twice as much, although re are a good part of members who see possible three additional increases to decided in March. But some traders had expected the Fed to clearly signalwhether it will pull the trigger on two or three more rate hikes this year.
Such bets had multiplied by a factor of 10 in slightly more than a year based on a belief that other major economies, notably in Europe, would continue expanding at a faster pace than the United States, allowing central bankers to react faster than what markets were pricing in.
Consumer prices rose 2% in March from a year earlier, according to the Fed's preferred gauge, after almost a year in which inflation softened unexpectedly.
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The economy expanded at a solid 2.3 percent annual rate in the first three months of the year.
The central bank is meeting as its board is undergoing a makeover, with a raft of new Trump appointees who appear generally supportive of the Fed's cautious approach to rates since the Great Recession ended.
Under Powell's predecessors, Yellen and Ben Bernanke, the board endured criticism from some Republicans over its decision to pursue a bond purchase program created to cut long-term borrowing rates and to leave its key rate at a record low near zero for seven years. The US dollar, however, turned negative for the session, having hit its highest level of 2018 shortly before the policy decision was released.
After the Fed's policy statement, traders of USA short-term interest-rate futures on Wednesday kept bets the Fed will raise interest rates at least two more times this year.
"Rising inflation expectations, an overall bullish commodity trend (late-cycle preference for commodities), geopolitical and financial risks are being offset by a rising dollar and rising real-rates", Saxo Bank analysts said in a note. At the same time, this does not constitute any deviation from the Fed's stated plan of normalizing monetary policy.
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