Key takeaways

• At its April meeting, the Federal Reserve left the federal funds rate unchanged at 3.50%–3.75%, marking a third consecutive meeting on hold, in line with our expectations and market consensus. The Fed remains firmly on hold with no urgency to cut, as persistent inflation, geopolitical risks, and elevated uncertainty reinforce a higher-for-longer stance.
• While the policy decision was straightforward, the meeting stood out for the degree of divergence within the Committee, with an 8–4 vote, the highest dissent since 1992. Inflation remains the dominant policy constraint, with the Fed explicitly linking pressures to higher energy prices and geopolitical developments.
• We don’t expect any rate cuts in 2026 or 2027 and remain overweight on US equities supported by strong earnings growth and a resilient macro backdrop. In fixed income, we favour high-quality income through investment grade credit and balanced duration. We continue to emphasise diversification via alternatives, including hedge funds and gold, to navigate macro and geopolitical uncertainty.

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

“Overweight” implies a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Underweight” implies a negative tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

“Neutral” implies neither a particularly negative nor a positive tilt towards the asset class, within the context of a well-diversified, typically multi-asset portfolio.

https://www.hsbc.com.my/wealth/insights/market-outlook/special-coverage/fed-holds-firm-as-inflation-and-uncertainty-persist/