FOMC Preview: Neutral US Fed to keep rates steady

Is it finally time to resume rate cuts?

The US Federal Reserve has been on wait-and-see mode since US President Donald Trump took office, pausing its monetary easing cycle in its first four meetings of the year. The fifth meeting is set to take place this July 28-29.

While it has indeed been more than half a year since caution took over the Fed, we believe it is not yet the time. Metrobank forecasts that the Fed will maintain its Federal Funds Rate (FFR) at 4.25%-4.50%.

Data indicates another wait-and-see

June data shows that the US economy has been faring well amid ongoing uncertainty. Despite Trump’s unpredictable tariff announcements, inflation and employment remained stable.

Inflation remains near but above the target inflation rate at 2.7%.Fed officials attribute this to incremental price increases from tariffs and anticipate upward pressure on prices in the fall. On the other hand, employment slightly expanded with the addition of 147,000 new jobs, with government and healthcare sectors seeing the most growth.

Neutrals outnumber doves

In his recent Bloomberg interview on July 18, Fed Governor Christopher Waller signalled a highly dovish stance. He said that there is no sign of an increase in inflation expectations and hinted that he will dissent any votes from his Federal Open Market Committee (FOMC) colleagues to keep interest rates steady.

Meanwhile, Chicago Fed President Austan Goolsbee said on July 11 that the newest tariffs on Canadian and Brazilian goods could raise inflation concerns and may necessitate a prolonged wait-and-see period.

Nonetheless, members of the FOMC remain mostly neutral, including FOMC Chair Jerome Powell, who remains grounded on his stance that the committee need not rush to lower rates.

It’s looking like another wait-and-see this month, with the committee poised to maintain rates once again.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)

MARIA KAILA BALITE is a Research Officer of the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She holds a Master’s degree in Applied Economics and also majored in Financial Economics for her Bachelor’s degree, both from De La Salle University Manila. Outside of work, her interests include thriller movies, K-dramas, and dogs.


CARMEN CASTAÑEDA is an intern in the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She is currently pursuing her Bachelor’s degree in Strategic Management and Economics from the University of Notre Dame in the US in hopes of incorporating economic insights into corporate strategy. As much as possible, she enjoys trying new cuisines and exploring new cities with her loved ones.