UBS delays Fed rate cuts to December

UBS Global Wealth Management joined a wave of brokerages in pushing back their US monetary policy easing forecasts, citing persistent inflation and resilience in the labor market and economic growth.

Brokerages are increasingly betting on no policy easing this year, in contrast to expectations of at least two quarter-point reductions earlier this year.

The wealth management division of UBS Bank expects the US Federal Reserve to cut rates by 25 basis points (bps) each in December 2026 and March 2027. The brokerage had previously forecast ⁠25 bps rate cuts in September and December this year.

The bank's analysts explained that the conditions necessary to justify a rate cut in September, particularly a slowdown in commodity inflation and a decrease in supply-side uncertainty, have not yet been met, noting that the strength of the labor market and economic growth has reduced the urgency of taking expansionary monetary measures at the moment.