UBS Report: Fed Expected to Cut Rates by 50 Basis Points Later This Year

UBS released a report on April 17, indicating that the Federal Reserve remains on a path toward further easing. According to Jin10, Federal Reserve Chairman Jerome Powell recently downplayed the need to tighten monetary policy due to rising energy prices, noting that policymakers typically 'ignore' supply shocks like oil price surges, especially when inflation expectations remain well-controlled. Although the Fed is still seeking further evidence of a sustained decline in core inflation before implementing additional easing measures, UBS still expects a 50 basis point rate cut later this year. Given that U.S. Treasury yields are significantly higher than pre-conflict levels, UBS believes there is ample room for them to decrease. The year-end targets for the 2-year and 10-year Treasury yields are set at 3.25% and 3.75%, respectively.