The Fed implemented 25 basis point interest rate cuts at its final meetings in 2025. However, while the Fed paused interest rate cuts at its January 2026 meeting, there is no clear view on when rate cuts will resume.
While some predictions suggest the Fed might not cut interest rates at all, UBS Global Wealth Management stated that a Fed rate cut is still possible, but there’s no need to rush.
When Will the Fed Cut Interest Rates?
According to Walter Bloomberg, UBS analysts predict that the Fed may cut interest rates if inflation falls despite stronger-than-expected non-farm payroll data in January.
According to analysts, the decline in US inflation will allow the Fed to continue on its path of interest rate cuts, despite strong employment data.
UBS Chief Investment Officer Mark Haefele stated that their base scenario is a 25 basis point rate cut in both June and September, which would “create a favorable environment for stocks, bonds and gold.”
Analyzing data from the London Stock Exchange (LSEG), UBS said that markets have reduced their expectations for interest rate cuts this year from 60 basis points to around 50 basis points, and are pricing in the first cut in July instead of June.
What Kind of FED Chairman Will Kevin Warsh Be?
According to Bloomberg, Krishna Guha, Vice President of Evercore ISI, stated that the candidate nominated by US President Donald Trump to head the Federal Reserve may take a more dovish stance than initially thought.
According to Guha, Kevin Warsh may not be the Fed chairman that the markets expect.
According to Krishna Guha at Evercore, Kevin Warsh’s tough stance on inflation may have been exaggerated.
According to Guha, while Warsh’s nomination initially boosted bond yields and lowered gold prices, Warsh’s policy stance may lean towards a more dovish monetary policy approach.
“Warsh stated that artificial intelligence and productivity increases could alleviate pressure on tight monetary policy by presenting them as positive supply shocks. While Warsh supports shrinking the Fed’s balance sheet, he assessed that it is unlikely to embark on an aggressive tightening policy that could shake the markets.”
*This is not investment advice.