HSBC reiterated its expectation that the Federal Reserve will keep interest rates stable for the next two years.
The bank announced that the Federal Reserve kept interest rates unchanged at 3.50% to 3.75% at its March meeting, and indicated a “wait-and-see” attitude in its decision statement.
Persistent inflation pressures and rising geopolitical risks continue to create uncertainty about the Fed’s monetary policy outlook, according to HSBC. In particular, rapid rises in energy prices are cited as increasing inflation risks, although risks to the labor market are slightly decreasing.
The bank maintains its view that the Fed will not change interest rates in 2026 and 2027 under current conditions. HSBC also noted that energy price fluctuations and geopolitical developments could support safe-haven demand and contribute to a stronger US dollar.
Meanwhile, the market is largely pricing in a scenario in which interest rates remain unchanged, according to CME’s FedWatch data. Therefore, the probability that the Fed will raise interest rates by 25 basis points in April is calculated to be 6.2%, while the probability that interest rates will remain at current levels is 93.8%.
*This is not investment advice.
