UBS Delays Fed Rate Cuts to September, Projects Funds Rate at 3.00–3.25% by 2026
UBS forecasts Fed cuts in September and December, lowering the funds rate to 3.00–3.25% by end-2026 but warns core inflation and growth risks could delay easing. It stays bullish on silver, citing industrial and jewelry demand to support prices near a 70x gold-silver ratio despite a 43% drop since January.
1. Adjusted Fed Rate Cut Forecast
UBS’s US economist now expects the Federal Reserve’s next rate cut in September followed by a second in December, forecasting the federal funds rate will reach approximately 3.00–3.25% by end-2026.
2. Inflation and Labor Market Considerations
The bank notes core PCE inflation remains near 3.0% year-over-year—with tariffs contributing roughly 50–75 basis points—and observes that zero job growth is viewed as consistent with stable unemployment, prompting policymakers to await clearer inflation declines.
3. Bullish Silver Outlook
UBS retains a bullish stance on silver, arguing that despite a 43% decline from January’s record high, robust industrial and jewelry demand should underpin prices and maintain a long-term gold-silver ratio around 70x.