The FOMC appears to be on track to keep the benchmark interest rate on hold throughout 2019 as the central bank plans to wind down the $50B/month in quantitative tightening (QT) by the end of September, and the revised approach for monetary policy may continue to produce headwinds for the USA dollar as the committee pledges to be 'patient as it determines what future adjustments to the target range for the federal funds rate may beappropriate'.
The Fed stressed that it would be "patient" on future rate hikes because leaders of the central bank want to see how the economy evolves in the coming months and inflation remains low.
"The decision to leave the target for the fed funds rate unchanged at 2.25-2.50% was unanimously expected, but the sharp drop in Treasury yields following the decision suggests investors were surprised by the dovish tone of the accompanying statement and economic projections", adds Pearce.
Since the start of the year, the Fed has kept rates, which influence the cost of mortgages, credit cards and other borrowing, at a range of 2.25% to 2.5%.
The central bank revealed forecasts showing that most officials favoured no rate rises in 2019 and only one in the next three years, in a marked turnaround of predictions they made at the end of 2018.
The Fed also said that in May, it will begin tapering the amount of proceeds it allows to roll of its balance sheet each month. Bank stocks were among the biggest losers, and finance firms tend to make bigger profits when interest rates are higher.
Powell said the total holdings will fall to a bit above $3.5 trillion.
Household spending and business investment, however, appear to have slowed, according to the Fed.
The British currency tumbled 0.73 percent against the US dollar on a rising probability of a "no-deal" Brexit that would likely slow economic growth.
"The Fed no longer has an appetite for tightening rates above" a level that would slow the economy, Al-Hussainy said.
"Given the overall favorable conditions in our economy, my colleagues and I will be patient in assessing what if any changes in the stance of policy may be needed", Powell said.
Traders are looking ahead to the latest interest rate policy decision Wednesday from the Federal Reserve.
Powell noted risks to his positive outlook include a slowdown in Europe and ongoing trade tensions with China. Though the US economy is on firm footing, it faces risks from slowing growth and trade conflicts.
The Fed also said that is will slow the monthly reduction of US Treasury bonds it holds from $30bn to $15bn from May onwards ending in September.
Benchmark U.S. 10-year notes were little changed in price, yielding 2.5369 percent, from 2.537 percent late on Wednesday.
"The focus shifted back to Brexit and the potential downside that a "no deal" would create", said Minh Trang, senior currency trader at California's Silicon Valley Bank. At that meeting, the Fed approved a fourth rate hike for 2018 and projected two additional rate increases in 2019.
"The markets believe that with the Fed on hold the economy will start to show improvement", said Carin Pai, executive vice president at Fiduciary Trust Company International, based in NY.