UBS Global Wealth Management has revised its expectations for the Federal Reserve’s policy path, pushing its forecast for rate cuts to March and June 2027 and dropping its previous expectation for any cuts this year. The institution said the change reflects its view that this week’s Federal Reserve meeting will deliver a more hawkish signal.
Rate-cut timetable moves further out
Under UBS Global Wealth Management’s latest forecast, the Federal Reserve is expected to cut rates by 25 basis points in March next year and by another 25 basis points in June. Its previous projection had called for 25-basis-point cuts in December 2026 and March 2027. The new path therefore shifts the first expected cut further into the future and removes this year from the expected easing window.
The Federal Reserve is scheduled to announce its interest-rate decision this week. The meeting will be the first chaired by the new Chair Warsh. For this meeting, the market broadly expects rates to remain unchanged. UBS’s revision focuses less on the single rate decision itself and more on the policy message, the wording of the statement and the rate path reflected in the dot plot.
Statement and dot plot in focus
In a report dated June 15, UBS Global Wealth Management wrote: “Although Warsh had previously expressed a relatively dovish stance, we expect the tone of this meeting to be more hawkish, both in the statement and in the dot plot.” The comment indicates that UBS views the communication from this meeting as more important than Warsh’s earlier remarks.
UBS also said major central banks will not rush to adopt a more dovish policy stance simply because a U.S.-Iran agreement has been reached. Instead, as developments unfold and data released over the coming months gradually show whether the energy shock is triggering a second-round inflation shock, central banks are expected by UBS to continue maintaining a cautious stance. That assessment forms part of the background behind the institution’s decision to delay its forecast for Federal Reserve rate cuts.