UBS delays the Fed's interest rate cut forecast until 2027, and this week's meeting is expected to send a hawkish signal

Comparative news, according to a Jin10 report, UBS Global Wealth Management postponed its forecast for the Federal Reserve's interest rate cut until March and June 2027, and no longer anticipates any interest rate cuts this year. The agency said the move reflected its judgment that this week's meeting would send a hawkish signal. UBS currently anticipates that the Federal Reserve will cut interest rates by 25 basis points in March and June of next year, respectively. The previous forecast was to cut interest rates by 25 basis points each in December 2026 and March 2027.

The Federal Reserve will announce its interest rate decision this week. This will be the first meeting under the presidency of the new Chairman Walsh. The market generally expects interest rates to remain unchanged. UBS Global Wealth Management analysts said in a report dated June 15: “Although Walsh has previously expressed a more dovish stance, we expect the tone of this meeting to be more hawkish, both in the statement and in the bitmap.”

UBS said that major central banks will not hastily switch to more dovish policy statements due to the agreement between the US and Iran. Conversely, central banks are likely to remain cautious as events unfold and data to be released in the coming months gradually reveal whether the energy shock is triggering a second round of inflationary shocks.