UBS anticipate the Fed to renew fee cuts later in 2025

UBS expects the Federal Reserve to renew fee cuts later this yr, regardless of its current resolution to carry charges regular. The U.S. central financial institution saved charges unchanged final week for the primary time since starting its easing cycle in September, citing persistently elevated inflation and a resilient labour market.

Nonetheless, UBS analysts anticipate that inflation will reasonable towards the Fed’s 2% goal by mid-year, creating situations for additional fee reductions. Fed Chair Jerome Powell additionally indicated that financial coverage stays “meaningfully” above the impartial fee, suggesting room for added easing.

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Vice Chair Jefferson made the case that coverage can be restrictive even with Fed Funds 100bp decrease:

• Fed’s Jefferson says glad to maintain Fed Funds on maintain at present fee

This text was written by Aaron Cutchburt at www.ubaidahsan.com.



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