UBS Shows a Surprise, yet Curious, Forecast by Expecting 3 Fed’s Rate Cuts in 2020!

The Swiss multinational investment bank and financial services, UBS, has predicted that the U.S. Federal Reserve could have three more rate cuts this year.

 

The forecast from the Swiss wealth giant has sparked curiosity in investors due to other predictions from analysts are neither no change or just one cut in 2020.

The analyst from UBS states that the trade war between the U.S. and China would reduce US GDP to just 0.5% YoY in the first half of 2020.

The latest implement on import tariffs on Chinese products was in September 2019 in which China retaliated by imposing tariffs on US products as well. Another big hit from the U.S. aimed to take effect on December 15, 2019, but the “Phase One” deal had been made two days prior to suspend the implementation.

“We think this tariff damage is going to push U.S. growth down … that’s actually going to trigger three Fed cuts, which is way off consensus, nobody believes that,” said UBS analyst to CNBC.

In the previous Fed meeting, the officials said that they are at a comfortable hold and would want to see a material downshift in the data before reassessing their position.

“We think they’re going to get that downshift. I think you need quite a bit of additional evidence though before they get there. So, we’re thinking first cut maybe in March but we really need to see … loss of growth momentum,” added UBS’ analyst.

Still, the analyst believed that the impact from a trade war could be a temporary negative factor to the market and the U.S. is not heading into a recession.