UBS On-Air: Paul Donovan Daily Audio 'An emergency cut without an emergency'
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The US rate-cutting cycle began with a 50bp cut—the sort of move normally reserved for an economic emergency. The US has near full employment, steady consumption, and rising real wages. This is no economic emergency. It is not plausible to claim Federal Reserve Chair Powell knows
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The desk believes the Federal Reserve's recent signaling reflects a marked shift towards a more cautious approach to rate cuts, as noted in the latest minutes. While a rate cut was considered appropriate back in December, the Fed under Chair Powell is likely to pursue a slower pace for future reductions, with inflation trends dictating the pace into 2025. Per the full note from UBS, the prospect of inflation risks tied to proposed trade policies under the new administration furthers the complexity of the Fed's outlook.
UBS On-Air: Paul Donovan Daily Audio 'Rate cuts are coming'
UBS On-Air: Paul Donovan Daily Audio 'Policy works with a lag'
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