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UBS Bank expects the Federal Reserve will not reduce interest rates until the June meeting.

Thursday 09th January 2025

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In a note published on Wednesday, analysts at Swiss investment giant UBS discussed their new forecasts regarding the U.S. Federal Reserve's interest rate movements. According to the note, UBS analysts state that the labor market report for December, scheduled for release on Friday, and inflation data set to be released next week will provide more signals about the state of the U.S. economy. While market pricing suggests that it is unlikely the U.S. Federal Reserve will cut interest rates at the monetary policy meetings scheduled for early 2025, UBS expects that the central bank will not reduce interest rates until around mid-year. UBS analysts predict that the upcoming data will show a slowdown in inflation and a cooling labor market, potentially paving the way for the U.S. Federal Reserve to start cutting interest rates again by its meeting in June. Consistent with the latest economic forecasts from the Federal Reserve, UBS expects the Federal Open Market Committee to cut interest rates for the second time during the third quarter of the year.