UBS: Now expects the Fed to cut interest rates by 100 basis points this year

UBS currently expects the Federal Reserve to cut interest rates by 100 basis points this year, higher than the previously predicted 50 basis points. UBS stated in its report that unless the August employment report performs strongly, UBS believes that the Federal Reserve will begin a loose cycle at the September meeting and cut interest rates by 50 basis points. "Our basic judgment is still that the US economy will avoid a recession, and the growth rate will remain close to the trend level of 2%. With interest rates at a 23-year high, the Federal Reserve has enough flexibility to support the economy and the market." UBS emphasized that overall household financial conditions are good, actual income is increasing, average debt repayment costs are still lower than historical averages, and total net wealth has increased by 37% since the beginning of the pandemic.