Odaily Odaily reports that UBS Global Wealth Management has pushed back its expectations for the Federal Reserve's interest rate cuts to March and June 2027, and no longer anticipates any rate cuts this year. The institution stated that this move reflects its assessment that this week's meeting will send a hawkish signal. UBS now expects the Fed to cut rates by 25 basis points each in March and June next year, whereas its previous forecast was for 25 basis point cuts in December 2026 and March 2027.

The Federal Reserve will announce its interest rate decision this week, which will be the first meeting chaired by the new Chair, Walsh. The market widely expects rates to remain unchanged. UBS Global Wealth Management analysts said in a report dated June 15: "Although Walsh has previously expressed a more dovish stance, we expect the tone of this meeting to be more hawkish, both in the statement and in the dot plot."

UBS stated that major central banks will not hastily shift to a more dovish policy stance just because a US-Iran deal is reached. Instead, as events unfold and data released in the coming months gradually reveal whether the energy shock is triggering second-round inflation effects, central banks are likely to maintain a cautious stance. (Jin Shi)

Odaily reported that when Kevin Warsh was sworn in as Chairman of the Federal Reserve, Trump told the new chair to "stay independent," "don't look at me, don't look at anyone, just do your job and do it well." However, this request will soon be put to the test. After chairing his first meeting as Fed Chairman, Warsh may have to deliver unwelcome news to Trump—despite Trump's repeated calls for lower borrowing costs, the market expects the Fed to hold rates steady at this meeting.

Bill Adams, Chief U.S. Economist at Comerica Bank, stated that for the Fed to cut rates, they would likely need to see a new negative shock to the labor market—whether it's an escalation of the conflict in the Middle East or the realization of potential downside risks from AI on employment. If these scenarios do not occur, the Fed will find it difficult to justify a rate cut under the current environment. Economists note that robust job growth over the past three months, coupled with rising inflation linked to the war with Iran, leaves policymakers little room for rate cuts. In recent weeks, traders have shifted their expectations from rate cuts to potential rate hikes later this year or in early 2027. (Jinshi)

Odaily Planet Daily News Leslie Falconio, currently serving as the head of taxable fixed income strategy at UBS Global Wealth Management, stated that following reports of a deal between the U.S. and Iran to reopen the Strait of Hormuz, which suppressed oil prices and triggered a rally in U.S. Treasuries, the pressure for the Federal Reserve to raise interest rates this year is easing.

Leslie Falconio pointed out that even before the ceasefire, as oil prices fell, "the two-year yield was still rising because the market was pricing in nearly 100% probability of a rate hike by December 2026." "What is happening now is that oil prices are falling, and the market is stripping out these rate hike expectations. That is why the two-year yield is declining."

New Fed Chair Kevin Warsh will chair his first monetary policy decision meeting this week. As surging crude oil prices accelerate inflation, voices within the Federal Open Market Committee (FOMC) supporting rate hikes this year are growing louder. Leslie Falconio expects the FOMC to formally remove its accommodative bias at this week's meeting, paving the way for a more hawkish outlook. However, she stated that she still expects the next move to be a rate cut, likely in 2027. (Bloomberg)

Odaily Planet Daily News The global financial market's attention will be focused on Washington this week as newly appointed Federal Reserve Chair Kevin Warsh chairs his first post-confirmation FOMC press conference. This marks not only his transition from a policy commentator to the "world's most powerful banker," but also a critical window for the outside world to observe whether a major shift in Federal Reserve monetary policy is underway.

The market widely expects the Fed to keep the benchmark interest rate unchanged at 3.50%-3.75% during this week's meeting. Compared to the specific rate decision, the market is more focused on how Warsh will reshape the Fed's "art of communication." For a long time, former Chair Powell tended to guide market expectations through transparent "forward guidance," but Warsh has previously expressed reservations about this approach publicly, arguing that the Fed should not provide too many interest rate hints to the market.

This meeting will also release the latest quarterly Summary of Economic Projections (SEP) and the "dot plot." For Warsh, who has a strong aversion to the dot plot, this is undoubtedly an awkward beginning, as he must find a balance between respecting the Fed's decision-making mechanism and articulating his own policy preferences. (Reuters)