NEW YORK, New York - The U.S. Federal Reserve following its two-day monetary policy meeting which concluded on Wednesday, has left interest rates unchanged in a bid to broadly position inflation at around 2 percent growth. This could mean an interest rate hike by about 2023.

U.S. stocks fell sharply despite the widely anticipated announcement which followed the meeting. The likelihood of interest rates rising soon than expected however unsettled markets. The U.S. dollar conversely jumped sharply.

"The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals," the board's statement said.

"Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses."

"The path of the economy will depend significantly on the course of the virus. Progress on vaccinations will likely continue to reduce the effects of the public health crisis on the economy, but risks to the economic outlook remain," the Fed statement said.

"The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer-term inflation expectations remain well-anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee's maximum employment and price stability goals. These asset purchases help foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses."

The Federal Reserve said it would continue to monitor the implications of incoming information for the economic outlook, and that it is prepared to adjust the stance of monetary policy, "as appropriate if risks emerge that could impede the attainment of the Committee's goals."

At the close of trading Wednesday, the Dow Jones industrials were down 265.66 points or 0.77 percent at 34,033.67.

The Standard and Poor's 500 dropped 33.17 points or 0.17 percent to 4,033.67.

The tech-laden Nasdaq Composite let go 33.17 points or 0.24 percent to 14,039.68.

The other main action on Wednesday was on foreign exchange markets where the U.S. dollar steam-rolled all other currencies.

The euro tumbled to 1.2007. The British pound plummeted to 1.3997. The Japanese yen declined to 110.64. The Swiss franc fell to 0.9039.

The Canadian dollar weakened sharply to 1.2264. The Australian dollar fell three-quarters of a cent to 0.7613. The New Zealand dollar was friendless at 0.7055.

Overseas, the FTSE 100 in London rose 0.17 percent. The German Dax declined 0.12 percent, while the Paris-based CAC 40 added 0.17 percent.

On Asian markets, the Australian All Ordinaries finished flat with a gain of just 0.40 of a single point or 0.01 percent to 7,633.40.

In Japan, the Nikkei 225 shed 150.29 points or 0.51 percent to 29,291.01.

China's Shanghai Composite dropped 38.23 points or 1.07 percent to 3,518.33.

The Hang Seng in Hong Kong dived. 201.69 points or 0.70 percent to 28,436.84.