The Federal Reserve on Tuesday left monetary policy on hold but said financial market turbulence posed threats to economic growth, leaving the door open to further easing next year.

COMMENTS:

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

Even though measurements of economic activity showed small gains since November's meeting, numerous impairments to the outlook persist, and thus members of the FOMC did not announce any new policies in today's statement and the same mildly upbeat tone of the prior statement continued. The economy was described as having been expanding moderately, with some slowing in global growth. One of the more worrisome sources of risks being not only domestic, but also euro zone, borrowing and spending habits failing to tangibly balance near term support with long term budget discipline. Strains in global financial markets were said to be a significant downside risk. Characterization of the labor market was upgraded to some improvement in overall labor market conditions without the drag of indicators point to continuing weakness attached to it.

ROBERT PHIPPS, A DIRECTOR AT PER STIRLING CAPITAL MANAGEMENT IN AUSTIN, TEXAS

Underwhelming. They gave the economy a very slight upgrade, but it sort of took the wind out of domestic equities, probably because some were hoping that they would hint at another QE-like program.

It seems like most of what's happening in equities has to do with the overseas markets. The game is still across the Atlantic, this is still all about Europe.

STEVE GOLDMAN,PRINCIPAL, GOLDMAN MANAGEMENT, SHORT HILLS, NEW JERSEY

It's slightly downbeat given the global concerns. But overall I don't think there's much of a surprise in the announcement. There's no change in policy at this point as well. Basically there's not much unexpected.

We've probably lost a couple of points on the S&P 500 on their downbeat assessment, which shouldn't be much of a surprise given what's going on.

Part of it (also) is how defensively oriented the market was leading into this.

DOMINICK CHIRICHELLA, SENIOR PARTNER, ENERGY MANAGEMENT INSTITUTE, NEW YORK

My view is the Fed message is almost word for word from last month, no change. I personally think that's good. I don't know why markets are reacting negatively since there was no indication of QE3 ahead of the meeting, despite rumors running around today.

I think oil is focused more on Iran and this possibility of a blockage of the Straits of Hormuz.

CARY LEAHEY, MANAGING DIRECTOR AND SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK

You almost have to compare the last two statements and bring them up to a strong light to see any changes. The Fed did upgrade the assessment of current conditions, but in a backhanded way because they continued to emphasize downside risks and slowing global growth.

The Fed's attitude is if they get a sense that the economy is moving below 2 percent growth or there is enough significant fiscal drag coming in the next month or two, they would be prepared to adopt QE3. They are certainly ready to lean against the wind should the economy falter.

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK

There was nothing surprising at all here. Policy was left

unchanged, which is what most people would have expected. We weren't anticipating any changes to communications strategy this time around and that is what happened as well. They were a very little more upbeat in terms of the current economic conditions, which would be anticipated after some of the firmer data that we have seen, but in general they still seem pretty cautious in terms of the outlook. They still see significant downside risk. So there is nothing here to change the longer-term Fed view.

KEVIN FLANAGAN, MANAGING DIRECTOR AND CHIEF FIXED INCOME STRATEGIST, MORGAN STANLEY SMITH BARNEY, PURCHASE, NEW YORK

There really wasn't all that much new of note. Perhaps policymakers wanted to end the calendar year without making big changes. The reference to downside risks means they've left it open to make any kind of changes they need in the future, whether it's using their communication mechanism or a third phase of quantitative easing.