Strong Jobs Data Eases Rate-Cut Urgency, UBS Says Fed May Delay Cuts

UBS has updated its expectations for U.S. monetary policy, maintaining that rate cuts by the Federal Reserve are still likely this year but pushing back the timing as stronger economic data reduces the urgency for immediate-action easing. The bank now forecasts that cuts may occur later in mid-to-late 2026, rather than in the earlier meetings previously priced by markets.

According to UBS analysts, recent robust jobs reports and inflation indicators have complicated the rate-cut path by showing the U.S. economy remains resilient, which in turn argues for the Fed to hold policy longer before trimming rates. While the Federal Open Market Committee hasn’t struck an aggressively hawkish tone, the stronger labor market and inflation persistence indicate that cuts will likely be more gradual and potentially shifted into July or October rather than sooner.

UBS’s revised outlook underscores that, even with a continued easing bias, markets should prepare for a slower reduction cycle and remain data dependent as fresh labor and inflation statistics emerge.

Market Implication: Investors may need to reprice expectations for “higher for longer” interest rates, supporting U.S. assets that benefit from stable yields while moderating expectations for aggressive easing.