As widely expected, the US Federal Reserve (Fed) maintained the Federal Funds Rate (FFR) at 3.50%-3.75% at the fourth Federal Open Market Committee (FOMC) meeting this year on June 16-17. 

• The decision to maintain policy rates was driven by a need to balance competing economic forces. The FOMC increased its inflation forecast amid energy price spikes caused by the US-Iran conflict, while the GDP growth forecast was revised downward amid the impact of high inflation and borrowing costs on spending and investments.
• The June decision removes the FOMC’s prior easing bias. Nevertheless, policymakers now project a single rate hike in 2026, reinforcing a higher-for-longer stance amid persistent inflationary pressures. 

• Metrobank anticipates the Fed to maintain its current policy rate until the end of the year, balancing inflationary pressures against stable economic growth.
• In the local space, we expect that the BSP will deliver a 25-basis-point (bp) policy rate hike during the Monetary Board meeting today to control inflation pressures.

• On global fixed income, maintain a defensive bias in the front to belly of the curve within 2- to 5-year tenors amid geopolitical‑driven volatility. Favor investment grade carry in resilient belly tenors while avoiding long‑dated sovereign exposure until oil and ceasefire risks stabilize. Re‑enter duration opportunistically on auction concessions or renewed disinflation signals.
• On global equities, elevated geopolitical risks may continue to limit sustained upside. Maintain a defensive positioning, with a focus on high-dividend and resilient sectors alongside selective interest in quality growth names.
• On gold, the Fed's slightly hawkish hold 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.
• On the local front, hold existing USD/PHP 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.