UBS delays Federal Reserve rate cut expectations until 2027, expecting this week's meeting to signal a hawkish stance

Gold Financial News reported that on June 16, UBS Global Wealth Management pushed back its expectations for when the Federal Reserve would begin cutting rates to March and June 2027, and no longer expects any rate cuts this year. The firm said the move reflects its assessment that this week’s meeting will release hawkish signals.

UBS currently expects the Federal Reserve to cut rates by 25 basis points in March and June next year, whereas its prior forecast had been for two 25-basis-point cuts in December 2026 and March 2027. The Federal Reserve will announce its interest rate decision this week, which will be its first meeting under newly appointed Chair Wuosh, and the market broadly expects rates to remain unchanged.

In a report dated June 15, UBS Global Wealth Management analysts said, “Although Wuosh previously took a relatively more dovish position, we expect the tone of this meeting to be more hawkish—both in the statement and in the dot plot.”

UBS said major central banks are unlikely to hastily shift to more dovish policy messaging because of the U.S.-Iran agreement being reached. Instead, as events unfold and data released over the coming months increasingly reveals whether energy shocks are triggering a second-round inflation shock, central banks around the world are likely to maintain a cautious stance.