UBS: Still Expects Fed to Cut Rates by 50 Basis Points Later This Year

Odaily News UBS research report points out that the Federal Reserve remains on a path for further easing. Fed Chair Powell recently downplayed the necessity of tightening monetary policy due to rising energy prices, noting that policymakers typically "look through" supply shocks like oil price spikes, especially when inflation expectations remain well-anchored. While the Fed is still seeking further evidence of sustained declines in core inflation before easing policy again, we still expect a 50 basis point rate cut later this year. Given that US Treasury yields are significantly above pre-conflict levels, we believe there is ample room for them to decline. Our year-end targets for the 2-year and 10-year Treasury yields are 3.25% and 3.75%, respectively. (Jin10)