CIBC Research discusses its reaction to today's FOMC policy decision.

"As widely expected, the Fed opted to hike a further quarter point, but also avoided saying that they had reached a judgement that further hikes might be required. That wording was replaced by language saying that they would now monitor incoming information to decide whether more rate hikes are in fact needed, which suggests that they could be on hold for a while, as there will be need for some elapsed time before they would be able to make such a judgement, as long as the data aren’t overwhelmingly leaning towards stronger than expected growth and inflation. The change reflects new uncertainties over the banking system, which they describe as “sound”, while admitting that “tighter credit conditions”, which presumably would include both higher rates and recent banking developments, will weigh on growth and inflation, but to an uncertain degree," CIBC notes.

"This is a hawkish pause, as the committee says it will be looking for signals on the need for additional firming, rather than a balanced statement that would have referenced potential moves in either direction. Similarly, they say they are “highly attentive” to inflation risks, with no similar statement on recession risks. But if, as we expect, Q2 sees little or no growth, and inflation signals continue to moderate, the May hike should prove to be the last for this cycle, with the first easing not likely until 2024, as we’ll also need time for inflation pressures to sufficiently abate," CIBC adds.