Fed Update: Steady rates, shifting views

The US Federal Reserve (Fed) kept policy rates steady for the first time since July, with its view of the economy improving.

Key points

• The Fed kept the Federal Funds Target Rate (FFR) at 3.50%-3.75% at the first Federal Open Market Committee (FOMC) meeting this year on January 27-28, with a 10-2 vote, as widely expected by financial markets.
• Fed Chair Jerome Powell said economic activity is now expanding at a “solid pace,” as consumers and businesses remain resilient.
• Inflation continues to be a concern, as prices continue to remain elevated due to tariffs. However, inflation outlooks remain well-anchored on the Fed’s own expectations.
• Powell said the current state of monetary policy still leaves room for further easing.

What now?

Metrobank maintains its forecast that the Fed will reduce its policy rate by a cumulative 100 basis points (bps) this year, bringing the target FFR to 2.50%-2.75% and concluding the current easing cycle.

(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.)  

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ECONOMIC UPDATES 

Policy Rate Views: Divided Fed kept rates unchanged for now

Growth momentum for both exports and imports are expected to be sustained

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