HSBC analysts expect the Federal Reserve to maintain current rates until 2027 amid stable core PCE inflation and resilient growth.
The Federal Reserve left interest rates unchanged for a fifth consecutive meeting, with a 9-3 vote split indicating internal debate. The federal funds rate is projected to remain at 3.50%-3.75% through 2026 and 2027, as core PCE inflation stabilizes.
Analysts cited resilient economic growth, a balanced labor market, and accelerating AI-driven investment as key factors. The Fed reiterated its commitment to returning inflation to its 2% target, reinforcing a constructive outlook for the USD.
HSBC maintains an overweight stance on US equities, driven by broadening earnings and AI leadership, while favoring high-quality investment-grade credit in fixed income.