UBS forecasts the Federal Reserve will hold rates longer before cuts in 2027, dismissing market expectations of two hikes by April.
UBS argues current market pricing of two Federal Reserve rate hikes by April is too aggressive, citing returning tariff disinflation and softer second-half growth. The bank expects an extended hold before a pivot to cuts in 2027, contrasting with near-term hawkish bets.
The firm highlights structural delays from the Fed’s framework reviews, raising the bar for policy shifts in either direction. It also flags AI-driven labor displacement risks, which could shift the Fed’s focus toward employment protection over inflation.
For gold, UBS maintains a constructive medium- to long-term view, countering near-term bearish outlooks tied to the Fed’s eventual pivot timing.