UBS Analysts Predict Fed to Implement Aggressive Rate Cuts Amid Weaker Economic Data
In a recent report, UBS analysts are confident that the US economy will experience a soft landing despite the recent weaker-than-expected economic data. The firm has adjusted its forecast for Federal Reserve rate cuts due to surprising data on inflation and the labor market.
Following disappointing labor market reports for July, UBS now expects the Fed to implement more aggressive rate cuts. The unemployment rate has increased to 4.3%, and the U-6 underemployment rate has climbed to 7.8%. JOLTS data revealed declines in hiring and quitting rates, while wages in the Employment Cost Index slowed to 0.9% quarter over quarter in 2Q.
UBS projects that the Fed will cut rates by a total of 100 basis points by the end of the year, with reductions of 50 basis points in September and 25 basis points each in November and December. The bank believes that the balance of risks favors more aggressive action by the Fed, despite remaining optimistic about a soft landing for the economy.
In conclusion, UBS analysts are predicting that the Federal Reserve will implement significant rate cuts in response to weaker economic data. This could potentially impact various sectors of the economy and financial markets, influencing interest rates, investment strategies, and overall economic growth. Investors should closely monitor these developments and adjust their portfolios accordingly to mitigate risks and capitalize on potential opportunities.