UBS Sees Two US Rate Hikes Following Strong Jobs Report
UBS has revised its forecast for US Federal Reserve interest rate hikes after a stronger-than-expected jobs report. The brokerage now expects two quarter-point increases, one in September and another in December.
This is a significant change from the bank's previous view that there would be no policy changes this year. UBS cited hawkish communication from Fed officials, rising inflation risks due to supply bottlenecks, and strong August labor data as factors contributing to its revised forecast.
The US jobs report for August showed a gain of 162,000 jobs, exceeding expectations, while the unemployment rate remained steady at 4.1%. Financial markets are pricing in a roughly 58% chance of a quarter-point rate hike at the Fed's September meeting.
Citigroup and Macquarie also revised their interest rate forecasts following the employment data. The strong jobs report and hawkish remarks from Fed officials have increased expectations for a rate hike, with markets now pricing in a higher probability than just days ago.