The first meeting of the FOMC (Federal Open Markets Committee) has passed without incident with the voting officials opting to hold fire on further interest rate increases.

Despite the increasingly criticized move to raise the Fed Funds rate by 25 basis points in December, the Fed showed little sign that it was ready to start toning down hawkish rhetoric about the scale and pace of the four rate hikes it expects to make in 2016.

Initially, the markets parsed the language of the statement that accompanies the rate decision as being hawkish and sold off sharply but Michael Kopp, US and European Equities strategist at Resona Corporate Partners said he expected markets to begin realizing that further Fed rate hikes were increasingly unlikely as economic data deteriorates.

“Markets have sold off pretty sharply this year – it’s already the worst ever start to the year for the Dow Jones Industrial Average and it’s clear that this can’t all be attributed to concerns over oil prices and the economic slowdown in China,” he explained.

The statement also revealed that the central bank was "closely monitoring global economic and financial developments" suggesting it acknowledged the severe volatility in global equity markets. It mentioned that the FOMC would be concerned if inflation ran further below expectations, a sign that it stood ready to ease monetary policy in order to achieve its objectives in that regard.

“This Fed meeting gave us nothing to get excited about and that was probably the Fed’s intention. They most certainly don’t want to pour fuel on the fire as far as the current stock market turmoil is concerned but they didn’t want to give the impression that monetary policy is fickle,” concluded Kopp.

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