UBS delays expectations for Fed rate cuts to 2027, expects hawkish signals from this week's meeting

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

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

UBS stated that major central banks will not hastily shift to a more dovish policy stance simply because a U.S.-Iran agreement has been reached. Instead, as developments unfold and data released in the coming months gradually reveal whether the energy shock is triggering a second round of inflation shocks, central banks are likely to maintain a cautious stance. (Jinshi)