UBS Expects 50 bps Fed Rate Cuts as Gov Miran Downplays Inflation Risks

Wall Street banking giant UBS forecasts further Fed rate cuts later this year. This comes as Fed Governor Stephen Miran claims the US-Iran war and tariffs will not have long-term impacts on inflation, but expects three rate cuts instead of four in 2026.

Bitcoin and gold will rise further if the Federal Reserve proceeds with more rate cuts this year. The broader crypto market will follow, with the S&P 500 hitting new highs.

UBS Maintains 50 bps Fed Rate Cuts Outlook

The U.S. Federal Reserve would deliver 50 bps rate cuts later this year, UBS reported in the latest insights. Economists at the bank, including those in Global Wealth Management, project two 25 bps reductions potentially in September and December.

This would bring the federal funds rate to roughly 3.00-3.25% by 2026-end. The CME FedWatch Tool shows traders currently expect no rate cuts by the Federal Reserve this year.

This forecast assumes Fed Chair Jerome Powell’s downplaying of monetary policy tightening and inflation remaining under control despite rising oil prices. US CPI and PPI inflation data showed readings coming in line or under with Wall Street estimates.

UBS expects Treasury yields to fall toward its year-end targets of 3.25% and 3.75% for 2-year and 10-year Treasuries, respectively.

If oil supply from the Strait of Hormuz starts to normalize, the bank giant sees treasury yields falling as investors scale back their expectations for rate hikes. However, if the disruption continues for a prolonged period, Fed rate cuts should drive yields lower.

UBS recommends investors to buy quality bonds as they offers an attractive source of diversification and income. “Holding some exposure to higher-beta segments such as emerging markets, high yield, or subordinated debt should also help build a diversified income strategy,” it added.

Miran Downplays Inflation Risks, Kevin Warsh Senate Hearing Looms

Federal Reserve Governor Stephen Miran on Thursday downplayed the inflationary impact of tariffs and the US-Iran war. While acknowledging that elevated oil prices raised inflation risks, Miran now sees three Fed rate cuts this year instead of the four he previously anticipated.

Trump-nominated Fed Gov Miran continues to call for aggressive Fed rate cuts. He believes easing is needed to support the labor market. However, initial jobless claims have come in lower for consecutive weeks.

Miran’s dovish comments are in opposition to some Fed officials. Powell, even as he trims his personal forecast slightly. Fed Williams called for holding rates steady ahead of the FOMC Meeting, signaling no need for Fed rate cuts.

Meanwhile, global stock and crypto markets’ attention is turning to President Trump’s nominee for Fed Chair Kevin Warsh. Trump promises to fire Jerome Powell if he refuses to resign.

Meanwhile, the Senate Banking Committee confirmation hearing for Kevin Warsh is scheduled for April 21. Warsh is widely viewed as favoring lower rates, with analysts expecting him to follow Trump’s requests for Fed rate cuts toward 3%.

His nomination process could face delays amid challenges from Senator Thom Tillis, who is demanding that the DOJ end its probe into Jerome Powell first. Markets are closely watching for cues on Fed rate cuts, with Arthur Hayes pointing out the need for Fed money printing.

How Will Bitcoin and Crypto Market Move?

The Trump administration is urging Fed rate cuts and passing the CLARITY Act. Bitcoin and the broader crypto market rebounded amid positive macro and crypto regulatory developments.

Also, Senator Cythia Lummis slammed Powell for sidelining Miran from the Fed board committees. She has also urged Congress to pass the crypto bill, stuck in the Senate amid stablecoin yield disputes.

Bitcoin and major altcoins would rise in the coming weeks, driven by increased institutional interest following the US-Iran ceasefire. “Models have now identified three systematic signals where current conditions closely resemble prior patterns that generated significant returns” said 10x Research.

10x added that altcoins beyond Zcash and Hyperliquid are flashing buy signals. It highlighted that a new Bitcoin signal has just triggered, the same signal appeared shortly before the October peak and again near the Trump inauguration.

UBS’s steady 50 bps Fed rate cuts outlook and Miran’s continued support for easing will trigger a rally in Bitcoin and stocks.