Federal Reserve Chair Janet Yellen and her colleagues have opened the door to a change in their outlook for the economy this year, and possibly a slower pace of interest-rate hikes that would make a move in March less likely.

”The Fed is really in a wait-and-see mode,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “They want to see if everything in the global economy and financial markets is really going to bleed through and affect inflation and their outlook for the economy.”

The meeting was a tricky communications challenge for the Federal Open Market Committee. U.S. central bankers had to acknowledge dimming expectations of global growth that have resulted in a sharp stock market sell-off while avoiding a definitive directional hint on the timing of the next rate increase. After all, it is only six weeks since they raised rates for the first time in almost a decade.

The FOMC said Wednesday it is “closely monitoring global economic and financial developments” while “assessing their implications for the labor market and inflation, and for the balance of risks to the outlook” in their statement after a two-day meeting in Washington.

David Fuller's view

I maintain that the Fed was rash in forecasting four quarter-point rate hikes in 2016, when they raised rates in December for the first time in nine years. 

Today’s statement should at least make it easier for the Fed to keep the Dollar Index in its current range for a few more months.  However, keep an eye on the Continuous Commodity Index which should signal the re-emergence of some inflation in USD terms as crude oil leads industrial commodities higher from their unsustainable downside overshoots.