Key takeaways

• The Federal Reserve left interest rates unchanged at 4.25%–4.50%, marking the fourth consecutive meeting without a policy move. While the Fed remains on hold, the updated Summary of Economic Projections (SEP) reflects a shift in tone, with lower growth expectations and higher inflation forecasts across the board.
• Chair Powell struck a balanced tone during the press conference, acknowledging ongoing risks from tariffs and geopolitical tensions while pointing to areas of resilience in the economy. He emphasised that while the inflation impact has yet to fully materialise, it’s expected to feed through to consumer prices in the coming months. He reiterated that the Committee is prepared to adjust policy as needed but prefers to wait for clearer inflation signals.
• We maintain a constructive outlook, particularly on US equities, where strong earnings growth, AI-driven productivity gains, and structural re-industrialisation trends remain supportive. In fixed income, we continue to take a selective, high-quality approach amid volatility, while the US dollar remains under pressure as markets focus more on trade policy and fiscal dynamics than near-term Fed moves. We continue to forecast three 0.25% rate cuts to be delivered in September, December and March 2026, bringing the Fed funds target range to 3.50-3.75% by the end of 2026.

Please refer to the full report for details about the event and our investment view.

https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/us-fed-on-hold-awaiting-tariffs-and-fiscal-policy/