UBS: The Fed is expected to start cutting interest rates in September
Economists at UBS believe that US economic data will continue to weaken in the coming months, and emphasize that the end of the Fed's current easing cycle is more important than the beginning. UBS economists reiterated their view of a soft landing for the US economy on Monday, predicting that the Fed will begin cutting interest rates in September and believing that the market may have misjudged the magnitude of the Fed's future rate cuts. UBS concluded: "Overall, we believe that the market underestimates the number of interest rate cuts the Fed may make during this cycle." The Fed kept its policy rate unchanged at its June meeting, and the median forecast in the updated dot plot showed that the Fed would only cut interest rates once by the end of the year, by 25 basis points, lower than the three cuts in March, which led some to worry that the Fed may keep rates unchanged until December.
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