UBS expects a June 25bp FOMC rate cut (from May previously), 75bp total in 2024 (from 100)

UBS has published its updated forecasts for the Federal Open Market Committee (FOMC):

  • Given the upside surprises to both payrolls and inflation, we now expect the Fed to wait a bit longer before cutting rates, making its first 25 basis point cut in June rather than in May
  • Our base case calls for one rate cut per quarter after that until the Fed Funds target range reaches 3.25~3.5%, in line with our estimate of the longer-run neutral rate
  • we believe that a wide range of outcomes is possible

UBS analysts say that the Fed is in no rush to begin lowering interest rates, citing:

  • the US economy’s surprising resilience
  • particularly the economy’s growth rates have exceeded the Fed long-term trend estimate of 1.8% since Q3 2022


This article was written by Eamonn Sheridan at Source