Policy Rate Updates: Slower pace of rate cuts seen in 2024 

The US Federal Reserve (Fed) maintained the Federal Funds Target Rate (FFR) at 5.25% – 5.50% for the seventh consecutive time during its Federal Open Market Committee (FOMC) meeting yesterday, June 12, 2024. This comes after a string of 11 prior rate hikes, including four hikes in 2023.

The accompanying Summary of Economic Projections (SEP) of the Fed pointed to a median projection of only one 25-bp cut in 2024, down from three cuts in the last SEP in March.

Metrobank Research also reaffirms its view that the Bangko Sentral ng Pilipinas (BSP) may begin its own easing cycle in the fourth quarter, lagging the Fed’s first policy rate cut to support the Peso. Given the new projections on US policy rate, we now forecast a total of 50 bps of cuts for the year to 6.0%, down from our previous projection of 75 bps.

For more of our analysis, please download the report below.

REPORTS

Policy Rate Views: US Fed signals one cut in 2024, keeps door open for two

As inflation continues to hobble the US economy, policy rates in the US may remain higher for longer. The BSP is likely to take its cue from any move of the US Fed.

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