JPMorgan strategists still expect the central bank to resume tightening after mid-2019, but recommend that investors unwind their bets for the United States five- to 30-year yield curve to flatten.
The decision at the Fed's first policy meeting of the year was expected after central bankers signaled strongly in recent weeks that they meant to tread cautiously about any further moves.
Pleased by the Fed's benign outlook, investors sent the Dow Jones Industrial Average up almost 435 points and back above the 25,000 level.
Over the last two months, the dollar index, which tracks the greenback versus six major rivals, has fallen around 1.7 percent, its worst two-month performance in a year.
■ In its statement on Wednesday, the Fed said "economic activity has been rising at a solid rate".
Investors liked what they heard.
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The FOMC dropped previous language calling for "some further gradual increases" in interest rates and opened the door for the next move to be either up or down, as it cited "global economic and financial developments and muted inflation pressures".
The committee said it will continue to run monetary policy in an ample-reserve regime, where control over short-term interest rates "is exercised primarily through the setting of the Federal Reserve's administered rates".
The Fed's policy statement left its overnight benchmark lending rate in a target range of 2.25 percent to 2.5 percent.
So what has changed since December to change the Fed's mind on rates?
Among those cross-currents: slowing economic growth in China and Europe, uncertainty caused by Brexit and the US-China trade fight, and the impact of the recently ended federal government shutdown. He didn't comment on the Fed's actions on Wednesday, but he did tweet "Dow just broke 25,000".
Boeing Co gained 6.8 percent after the world's largest planemaker forecast full-year profit and cash flow above analysts' estimates amid a boom in air travel and speedier 737 production.
After an additional one-quarter-percentage-point increase in December, to 2.25%-2.50%, Powell agreed Wednesday the Fed was close to neutral, meaning the key rate was neither boosting nor retarding the economy.
"As long as the USA economy continues to grow and corporate profits climb, I expect cyclical sectors aligned with the economy's growth continue to lead the bull market higher in the near term", said State Street's Arone.