Federal Reserve leaves rates unchanged, as expected

• Rates left unchanged in 0.00-0.25% range
• Taper pace left unchanged, scheduled to end in March
• Taper was not expected to be sped up
• Fed says it expects that it will soon be appropriate to raise the target range
• Risks to the economic outlook remain, including from new variants of the virus.
• The Committee would be prepared to adjust the stance of monetary
  policy as appropriate if risks emerge that could impede the attainment
  of the Committee’s goals

Economists were looking for a signal of a hike at the next meeting, on March 16 with likely candidate as a indication that maximum employment was close. Market pricing suggests a 90% chance of a March hike, there’s also some tail risk of a 50 bps hike in March and that will need to be addressed.

Much of the intrigue around the decision is around the balance sheet runoff plan and Powell will be asked about that at the press conference, which is 30 minutes after the decision at 2:30 pm ET.

USD/JPY was trading at 114.33 just ahead of the decision.