Fed more upbeat on economy as midyear rate hikes still in play

The Federal Reserve gave no sign Wednesday that it is wavering on hiking interest rates later this year, despite rockiness in global markets and some recent disappointing economic data.

The policy statement released by the central bank made few changes from the prior statement in December, but what changes there were tilted mainly in a hawkish direction.

For instance, the U.S. central bank was more upbeat about the real economy, citing “solid” growth and “strong” job gains and expressed no concern with the global economic outlook.

U.S. stocks gyrated after the announcement, with the S&P 500 SPX, -0.98% turning slightly negative.

The policymakers remained optimistic about inflation, repeating that their favorite measure of prices will move back gradually to the 2% annual target rate after being pushed down by “transitory” factors.

In one victory for the doves, the Fed added that it would consider “international developments” in assessing when to hike rates. The European Central Bank this month announced its own bond-buying program in response to weakness in the eurozone.

As widely expected, the statement repeated that the central bank can be “patient” in hiking rates. This effectively takes rate hikes off the table for the next two policy meetings in March and late April. Interest rates have been near zero levels since the end of 2008.

Ian Shepherdson, chief U.S. economist at Pantheon Economics, agreed a June rate hike remained on the table “depending on the labor data.”