The US Federal Reserve (Fed) maintained the Federal Funds Target Rate (FFR) at 3.50%-3.75% at the third Federal Open Market Committee (FOMC) meeting this year from April 28 to 29, as widely expected by financial markets

• Fed Chair Jerome Powell highlighted the uncertainty brought about by the conflict against Iran and the risks it poses to the Fed’s dual mandate.  
• The Fed was at its most divided since 1992 as four voting members dissented, including Stephen Miran who voted in favor of delivering a rate hike.
• Powell maintained that the Fed is “pretty close” to the neutral rate which he stated is likely within the 3% to 4% range.
• The Fed Chair also announced that he intends to remain in the Fed as a governor after his term ends on May 15. 

• Metrobank projects a 25-basis-point reduction in the Fed Funds Rate (FFR) by year end, bringing the FFR to 3.50% (upper bound) by end-2026.
• In the local space, we expect that the Bangko Sentral ng Pilipinas (BSP) will deliver a cumulative 50 bps of hikes this year to uphold its price-stability mandate, bringing the target Reverse Repurchase (RRP) rate to 4.75% by year-end.
• The Fed's slightly hawkish position turned precious metals bearish, with gold seen hitting a four-week low around USD 4,510. Investors with a longer horizon can tranche in at current levels and on further dips.
• Elevated levels of geopolitical risk may continue to limit sustained upside in global equities. Maintain a defensive positioning, with a focus on high-dividend and resilient sectors alongside selective interest in quality growth names.
• Maintain a defensive bias in the front to belly of the curve within 2-5 years amid volatility driven by geopolitics. Favor investment-grade bonds with medium term maturities, while avoiding long‑dated sovereign bonds until oil and geopolitical risks stabilize. Look for better entries into long-term bonds during upcoming auctions or upon signs of cooling inflation.
• Hold existing US dollar positions but avoid chasing near 61.30. Look to add on dips toward 60.85-61.00 if needed, while treating 61.70 as near-term resistance where gains may slow.