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

Golden Financial News reported that on June 16, UBS Global Wealth Management pushed back its expectations for the Federal Reserve to cut rates to March and June 2027, and no longer expects any rate cuts this year. The firm said the move reflects its judgment 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 was for 25 basis point cuts in December 2026 and March 2027.

The Federal Reserve will announce its interest rate decision this week, which will be the first meeting chaired by the newly appointed chairman, Wosh. The market generally expects that rates will be kept unchanged. In a report dated June 15, UBS Global Wealth Management analysts said: “Although Wosh previously expressed a relatively dovish stance, 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 will not suddenly shift to a more dovish policy stance just because a deal regarding the U.S.-Iran agreement has been reached. Instead, as events unfold and data released over the coming months gradually reveals whether energy shocks are triggering a second-round inflation shock, central banks around the world are likely to maintain a cautious posture.