UBS sees a raft of Fed rate cuts next year on the back of a U.S. recession
Publishing timestamp: 2023-11-14 12:30:33
Summary
UBS expects slower growth, rising unemployment, and disinflation to lead the U.S. Federal Reserve to cut its benchmark interest rate to a target range between 2.50% and 2.75% by the end of 2024. UBS believes that starting conditions are worse now than they were 12 months ago, with a large amount of credit being withdrawn from the U.S. economy. The bank predicts that the U.S. economy will enter a recession and that the Federal Reserve will cut interest rates by as much as 275 basis points in 2024. UBS also highlights concerns about tightening credit and lending standards, lower labor market income, and elevated spending relative to income. The bank expects the economy to contract in the middle of next year, with GDP growth dropping to 0.3% in 2024 and unemployment rising to nearly 5% by the end of the year. However, UBS forecasts a recovery in 2025 driven by monetary policy easing, with GDP growth returning to around 2.5% and the unemployment rate peaking at 5.2% in early 2025.
Sentiment: NEGATIVE
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