UBS analysts are confident in their prediction of a soft landing for the US economy. They believe that inflation is on a downward trend and that the Federal Reserve is prepared to cut rates to support economic growth.
One of the key factors that UBS points to in bringing down inflation is moderating consumer spending. They emphasize that the strength of consumer demand will determine how the economy develops in the coming months.
UBS acknowledges that recent economic data has shown some positive surprises, but they maintain their view of below-trend growth. They highlight the ISM PMIs as confirming the slowdown in growth. Additionally, they note that softer consumer demand is currently easing inflationary pressures.
UBS believes that recent comments from Federal Reserve policymakers, including Chair Powell, indicate that rate cuts are likely to begin in September. They point to a near-100% market expectation of a September cut, with more cuts expected by year-end. UBS predicts that the Fed will take a measured approach, cutting rates once per quarter unless economic conditions deteriorate.
UBS analysts remain confident in their forecast of a soft landing for the US economy. They believe that moderating consumer spending and easing inflationary pressures will support economic growth in the coming months. Additionally, they expect the Federal Reserve to begin cutting rates in September, with further cuts possible if economic conditions worsen. Overall, UBS’s analysis provides valuable insights into the current state of the US economy and the potential challenges and opportunities that lie ahead.
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