Sticky Inflation And Supply Bottlenecks Push Back Fed Easing

UBS has pushed back its forecast for Federal Reserve rate cuts to late 2026 due to sticky core goods inflation and worsening supply chain pressures. Resilient US economic growth and stable labor markets are allowing the Fed to remain patient despite an overall easing bias.

Key Takeaways

• 1.Fed rate cut expectations have been delayed to December 2026 and March 2027 due to persistent core goods inflation.
• 2.Core PCE goods inflation remains high, driven by AI-related software pricing and renewed supply-chain stress.
• 3.Resilient 1Q growth (2.5%) and stable unemployment provide the Fed with the flexibility to remain patient.

Table of Contents

• Sticky inflation and supply bottlenecks push back Fed easing
• Global asset class preferences definitions
• Appendix
• Risk information

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