The Federal Reserve held interest rates steady at 5.25% to 5.5% during its March meeting Wednesday, signaling readiness to lower borrowing costs in the near future.

The announcement came alongside the release of new economic projections revealing a Federal Open Market Committee (FOMC) consensus for three rate cuts in 2024, but a slightly lower pace of rate reductions going forward compared to December estimates.

During the press conference, Fed Chair Jerome Powell remarked that it is “likely to cut rates at some point this year,” adding that the Fed will do so when obtaining “greater confidence inflation is moving sustainably down to 2%.“

After the latest Federal Reserve meeting, economists are weighing in with different views that reflect a mix of optimism, caution and critical analysis regarding the implications of the Fed’s decisions on the economy and the markets.

The S&P 500 Index closed at record high levels on Wednesday, with the SPDR S&P 500 ETF Trust ( SPY ) up 0.9%.

Charlie Ripley, senior investment strategist of Allianz Investment Management, said he views the Fed’s cautious stance on rate cuts as being prudent given the recent inflation data.”The Fed exercising patience … appears to be the right call,” he said, but also mentioned a significant gap between the Fed’s long-term policy rate forecast and market expectations, suggesting: “there is still work to be done.”

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, sees a silver lining in the Fed’s communications, describing the outcome as “very bullish for markets.” He highlighted the lack of new worrisome announcements and the potential slowdown of the balance sheet runoff as positive signals for the markets, predicting that “markets continue to have a green light to run higher.”

Touching on the Fed’s signaled patience, Mohamed El Erian, president of Queens’ College and chief economic adviser at Allianz, focused on two main points: the timeline to reach the 2% inflation target and the approach to achieving its target balance sheet size. He interprets these signals as “the right approach,” aiming to maintain economic well-being and prevent liquidity-related market disruptions, albeit with a nuanced acceptance of higher inflation risk.

Quincy Krosby, chief global strategist for LPL Financial, shared an optimistic view, interpreting the Fed’s statement as positive for markets. She said: “the FOMC statement was immediately welcomed by the market,” especially with the expectation of three rate cuts still on the table, albeit with a cautious approach by the data-dependent Fed.

Joseph Brusuelas, principal & chief economist at RSM LLP, outlined a cautious yet progressive outlook. He noted, “Policy remains restrictive,” but said he anticipates movement toward rate cuts, underlining the economy’s resilience and a potential easing of inflation toward the 2% target. Brusuelas sees this as setting the stage for improved economic expansion.

Bill Adams, chief economist for Comerica Bank, maintained a cautious but forward-looking stance and said: “Comerica continues to expect the Fed to cut the fed funds target by three-quarters of a percent over the course of 2024.” Adams sees these adjustments as key to rebalancing the economy while still considering it too early for immediate rate cuts.

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