As widely expected, the US Federal Reserve (Fed) kept the Federal Funds Target Rate (FFR) unchanged at 3.50%-3.75% in a 9-3 vote during its fifth Federal Open Market Committee (FOMC) meeting this year.

Key points

• Fed Chair Kevin Warsh said the US economy has been showing “impressive resilience even with recent shocks,” and noted strong capital investment driven by the tech sector. Although inflation remains elevated, labor market indicators are stable. 
• The Fed’s current priority is achieving the 2.0% inflation target, Warsh said. Despite recent weaker-than-expected inflation print, policy decisions will be guided by underlying data trends. 
   

What’s next

Metrobank anticipates the Fed to maintain its current policy rate through the end of the year, balancing risks to its dual mandate of price stability and maximum employment.  
 

Implications on investors

• Global fixed income: An average portfolio duration of 2 to 7 years may be maintained amid volatility driven by geopolitics and elevated US rates. While the situation typically calls for a defensive stance, the opportunity to invest in higher all-in yields cannot be ignored. Consider staying nimble; bouts of volatility may be used to gradually add longer and high-quality sovereign and corporate bond exposure. Depending on the issuer, it is possible to find bonds that yield at or just below 5% in this part of the curve.
• Global equities: A neutral to cautiously defensive stance on global equities  may be maintained. Market players continue to navigate elevated uncertainty from AI spending concerns, higher energy prices and funding costs, and geopolitical risks. While the long-term AI growth theme remains supported by strong demand prospects, recent weakness in semiconductor and tech stocks highlights investors’ concerns over valuation, capital expenditure sustainability, and earnings visibility.  
• Gold: The precious metal remains supported at USD 4,000 levels. Long-term prospects are still bullish, as global central banks continue to accumulate gold and diversify reserves. However, near-term levels may remain capped on elevated oil prices and bond yields.  
• USD/PHP: Near-term support is seen at 61.25 and 60.87, while the recent pullback in the US dollar index may help keep the pair range-bound in the short term. 

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