UBS: The pace of Fed rate hikes may be lower than market expectations, and it expects to maintain interest rates unchanged following a December hike.

TechFlow reports that on September 25, UBS stated that despite recent strong U.S. economic data and rising inflation pressures, which have heightened market expectations for further Federal Reserve tightening, the bank believes the actual extent of rate hikes may be lower than current market pricing.

UBS forecasts that the Fed will raise rates once this December before holding them steady, and anticipates inflation will steadily decline over the next six months. Meanwhile, higher bond yields are creating new fixed-income investment opportunities. UBS remains optimistic about fixed-income assets, believing that the resilience of the U.S. economy and AI investments will continue to support corporate earnings.