Full recap: Here are Fed Chair Powell's market-moving comments as stocks rally on new rate outlook

The Federal Open Market Committee will not be looked back on positively after the central bank did not push back on market expectations for cuts next year, said Brad Conger, deputy chief investment officer at Hirtle Callaghan & Co.

"Today's statement was Powell's golden chance to press back on the markets' undermining of his policy," Conger said. "Instead, they used the occasion to congratulate themselves on a mission accomplished."

"I fear history will not be kind to this FOMC," he added.

— Alex Harring

The Federal Reserve is willing to cut rates even if the U.S. economy doesn't dip into a recession in 2024, Chair Jerome Powell said.

"It could just be a sign that the economy is normalizing and doesn't need the tight policy," he said.

Powell also said that the Fed is now seeing progress on inflation across the three main core areas.

The comments could ease concerns that the projected rate cuts reflect a split opinion on the economy by the Fed members.

"Overall, they seem to be in-tune with economic realities, which is encouraging as we enter a new chapter of the Fed reaction function," Dylan Kremer, chief investment officer for Certuity, said in an email.

— Jesse Pound

Central bankers think the labor market is finally easing into a sweet spot.

"Overall, the development of the labor market has been very positive. It's been a good time for workers to find jobs and get solid wage increases." Federal Reserve Chair Jerome Powell said during a press conference on Wednesday.

"You see job growth still strong but moving back down to more sustainable levels given population growth and labor force participation," Powell said, adding that the "era of this frantic labor shortage is behind us." Wages are still running higher than what would be consistent with 2% inflation—the Fed's target inflation level—over a long period of time, but have gradually been cooling off, he added.

Payrolls grew faster than expected in November while the unemployment rate fell.

— Pia Singh

The inflation fight isn't over, but central bank policymakers will start to discuss policy easing amid signs of cooling in both inflation and the labor market, according to Federal Reserve Chair Jerome Powell.

"The question of when will it be become appropriate to begin dialing back the amount of policy restraint in place that begins to come into view, and is clearly a discussion topic of discussion out in the world and also of discussion for us at our meeting reading today," Powell said.

"I would say there's a general expectation that this will be a topic for us looking ahead," he added.

— Sarah Min

The Federal Reserve on Wednesday indicated it could be cutting its key interest rate by three quarters of a percentage point in 2024. Markets, though, think it could be double that.

Following the Fed meeting, traders in the fed funds futures market were pricing in 150 basis points, or 1.5 percentage points, worth of cuts in the year ahead, according to the CME Group's FedWatch indicator. That would take the benchmark funds rate down to a target range of 3.75%-4%.

According to the Fed's "dot plot," it won't get to that level until sometime in 2025.

—Jeff Cox

The Dow Jones Industrial Average soared more than 400 points, more than 1%, to surpass the 37,000 threshold for the first time as investors embraced the Federal Reserve's outlook for rate cuts.

At its highest level for the day, the 30-stock Dow hit 37,035.07.

The S&P 500 surpassed the 4700 level, gaining 1.4%, while the Nasdaq Composite jumped 1.45%.

-Darla Mercado

Federal Reserve Chair Jerome Powell said he does not expect further tightening will be necessary.

"We're very focused on [how high to raise the policy rate]," Powell said. "People generally think that we're at or near that. And I think it's not likely that we will, we'll hike, although we don't take that possibility off the table."

— Sarah Min

Fed Chair Jerome Powell warned that the U.S. economy could still make an unexpected return into recession despite its resilience in 2023.

"There's little basis for thinking that the economy is in a recession now. I think there's always a probability that there will be a recession in the next year. It's a meaningful probability no matter what the economy is doing. So it's always a real possibility," Powell said.

The ability to bring inflation back down to 2% without causing a large spike in unemployment would qualify as a "soft landing," but Powell isn't ready to call the process a success.

"This result is not guaranteed. It is far too early to declare victory," Powell said.

— Jesse Pound

Fed Chair Jerome Powell said while the Federal Reserve's policy rate is likely at or near its peak in this tightening cycle, he would not rule out another rate hike.

"We are prepared to tighten policy further if appropriate," he said at the post-meeting press conference.

In fact, the central bank is committed to achieving a stance of monetary policy that is "sufficiently restrictive" to bring inflation down to its 2% target rate over time, he added.

"While participants do not view it as likely to be appropriate to raise interest rates further, neither do they want to take the possibility off the table," Powell said.

— Michelle Fox

Indications of interest rate cuts on the horizon from Federal Reserve officials underscores that the economy is better positioned with the central bank's goals, according to Jon Maier, chief investment officer of Global X.

"The market is celebrating that the Fed dots moved closer to the markets," he said. "This isn't just a mere decision to maintain current rates; it's a commendation for an economy that appears to be aligning with the Fed's long-term objectives."

— Alex Harring

Fed Chair Jerome Powell said that the central bank sees the U.S. economy losing steam in the final months of the year.

"Recent indicators suggest that growth in economic activity has slowed substantially from the outsized pace seen in the third quarter. Even so, GDP is on track to expand around 2.5% for the year as a whole," Powell said.

Powell also said that activity in the housing sector has "flattened out" after picking up over the summer, and said that data suggested that higher rates are slowing business investment.

— Jesse Pound

Federal Reserve Chair Jerome Powell admitted the central bank's efforts to cool inflation have started to take hold, though he reiterated there is still further to go.

"Inflation has eased from its highs, and this has come without a significant increase in unemployment. That's very good news," Powell said during a press conference.

"But inflation is still too high. Ongoing progress in bringing it down is not assured and the path forward is uncertain," he continued.

Looking ahead to 2024, Powell stressed the central bank's commitment to bringing inflation down to its 2% goal. He emphasized that restoring price stability is essential to achieve and maintain strong labor market conditions.

— Sarah Min, Jeff Cox, Pia Singh

The Federal Reserve's rate cut cycle will likely begin in June, said Whitney Watson, global co-head and co-chief officer of fixed income and liquidity solutions at Goldman Sachs Asset Management.

She anticipates a 25 basis point cut to start, with the central bank following a measured approach to reach a policy rate range of 4.25%-4.5% by the end of 2024.

"With potential downside risks to economic growth outweighing upside risks to inflation for the first time in several years, we believe there is a growing case for adding duration alongside exposure to high-quality fixed income assets in 2024," Watson said.

— Michelle Fox

The Federal Reserve released its December meeting statement on Wednesday. See what changed from the October-November meeting here.

— Alex Harring

Market participants cheered as equities rallied Wednesday afternoon, fueled by the Federal Reserve's signal that it would ease interest rates moving forward. The Fed had also formally lowered its inflation forecast for 2024, forecasting a 2.4% rate down from 2.6%.

"The question going into this was is the Fed going to meet the market or is the market going to meet the Fed? It looks like the Fed has bridged that gap in terms of meeting the market at least three-quarters of the way on what was priced via the dot plot," said Kristen Bitterly, Citi's Global Wealth Head of North America Investment. Looking ahead to Powell's conference, she asked, "is he going to make any comments given the market rally?"

John Bellows, portfolio manager at Western Asset, called the improvements on inflation "significant." He added, "I think it's mostly about inflation here, the tightening or loosening of financial conditions may or may not be appropriate, but as long as inflation is lower, that's what the Fed is going to respond to…the news on inflation has been good, and they're reflecting that here."

Similarly, Greg McBride, chief financial analyst at Bankrate, said all indications point to the central bank being done raising interest rates.

To be sure, some aren't entirely convinced, thinking the rally may be premature.

"I don't think that they're showing that they have, at this point at least, a real tight consensus on how many cuts next year," said Dennis Lockhart, former CEO of the Federal Reserve Bank of Atlanta. "The markets have a tendency to get ahead of the policymakers."

— Pia Singh

The Federal Reserve's pivot to undo its rate-hiking cycle is generally thought to stimulate the economy, but David Kelly believes that it could inadvertently hamper consumer borrowing.

"We waited a whole year for the Fed to pivot and finally as a Christmas present they gave us a pivot," JPMorgan's chief global strategist told CNBC's "Power Lunch" on Wednesday. "I am a little worried that the most dangerous time for the economy is when a tight Fed begins to ease."

That's because consumers may delay their borrowing until a later date as they wait for interest rates to eventually come down. This effect, Kelly said, is "very bad for the economy."

Ultimately, the Fed's pivot is good news today for both the stock and bond market, the strategist said. "But I'm just a little bit more cautious on growth now that the Fed has finally pivoted."

— Lisa Kailai Han

The major averages jumped upon the Federal Reserve's announcement that three rate cuts are ahead in the new year.

The Dow Jones Industrial Average leapt more than 170 points or nearly 0.5% on Wednesday afternoon. The S&P 500 added 0.5%, and the Nasdaq Composite jumped 0.4%.

-Darla Mercado

Central bank policymakers have decided to hold the benchmark borrowing rate steady at a range between 5.25% to 5.5%.

The move was widely expected by markets.

Read more about the Fed's decision here.

-Darla Mercado

The major averages are little changed in the run-up to the Federal Reserve's announcement.

The S&P 500 is up 0.04%, while the Dow Jones Industrial Average is up 0.02%, as of 1:50 p.m. ET. The Nasdaq Composite is down 0.04%.

The 2-year Treasury yield is at 4.674%, hovering near its session low of 4.670%. The 10-year yield is also near its session low, trading at 4.164%.

The Dollar index is at 103.93, approaching its high of the session of 104.031.

-Darla Mercado, Gina Francolla

Market participants are getting a little too excited about the prospect of sizeable rate cuts in the new year, according to Wells Fargo Investment Institute's Scott Wren.

"The market is pricing in around 125 basis points of Federal Reserve cuts by the end of next year," wrote the senior global market strategist in a note on Wednesday.

"That is overly optimistic in our opinion," he said. "We do not think the Fed will deliver what the markets are pricing in."

Instead, Wren anticipates the target range will end 2024 between 4.75% and 5%. Currently, the target rate is between 5.25% and 5.5%.

"Some progress on inflation has been made, and the labor market and the economy are gradually slowing," Wren said.

-Darla Mercado

The Federal Reserve's move to hold rates steady for a third time isn't the main event on Wednesday.

Instead, market participants are eager to see where the central bank stands on its projections for interest rates going forward.

That means the dot plot – the Fed's grid of individual members' outlook on interest rates – will be a key focus for traders.

The chart will likely show that the central bank dropped an expected rate hike for 2023, but what's up in the air is the outlook for 2024 and beyond.

Read more about what investors are watching in the Fed's announcement.

-Darla Mercado, Jeff Cox