UBS Expects Fed to Cut Rates 50 Basis Points by Year-End; 10-Year Treasury Yield Forecast at 3.75%

Gate News message, April 18 — UBS analysts expect the Federal Reserve to cut interest rates by a total of 50 basis points by the end of 2026, with the bank maintaining its view that monetary policy easing remains on track despite recent energy price increases.

According to a UBS research note, Fed Chairman Jerome Powell has indicated that the need for tightening is limited, noting that supply shocks such as rising oil prices are generally disregarded as long as inflation expectations remain controlled. The Fed is seeking more evidence of sustained core inflation decline before proceeding with rate cuts. UBS forecasts the 2-year Treasury yield will reach 3.25% by year-end and the 10-year Treasury yield will reach 3.75%, citing room for downward movement given current yields remain elevated compared to pre-geopolitical tension levels.

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