UBS warns: The Federal Reserve will cut interest rates by at least 50 basis points this year, and the market will embark on a "roller coaster" ride!

UBS Group AG CEO Sergio Ermotti said on Wednesday that market volatility may intensify in the second half of this year, but he does not believe that the United States is about to fall into a recession, although an economic slowdown is possible. Last week, global stock markets experienced sharp sell-offs as investors digested weak economic data from the United States, sparking concerns about a possible economic downturn in the world's largest economy. This also raised questions about whether the Federal Reserve needs to adjust its monetary policy stance and adopt a less aggressive approach. The Fed kept interest rates unchanged at the end of July, with rates at their highest level in 23 years. When asked about the outlook for the U.S. economy, Ermotti said, " There may not necessarily be a recession, but an economic slowdown is indeed possible." Ermotti stated after UBS announced its second-quarter performance: "Macroeconomic indicators are not yet clear enough to talk about a recession, and it may be too early. What we know is that the Fed has enough power to intervene and support the economy, although anything they do will take time to transmit throughout the entire economic system." UBS expects the Fed to cut rates by at least 50 basis points this year. According to data from the London Stock Exchange Group (LSEG), traders are divided on whether the Fed's next meeting in September will see a rate cut of 50 basis points or 25 basis points. In an interview, Ermotti said investors are likely to see higher market volatility in the second half of the year, partly due to the U.S. presidential election in November. He said, "This (U.S. election) is a factor, but if I look at the overall geopolitical landscape, examine the macroeconomic conditions, and the volatility we have seen in the past few weeks— to me, this is a clear sign of vulnerability in certain aspects of the system—people should expect volatility to increase for sure." Another uncertainty in the future is monetary policy, and whether the Fed needs to cut rates more aggressively to counteract the economic slowdown. In Switzerland, where UBS is headquartered, the local central bank has already cut rates twice this year. The European Central Bank and the Bank of England have also each announced a rate cut. Bruno Verstraete, founder of Lakefield Wealth Management, said: "Given upcoming unknown events such as the U.S. presidential election, we have gone from feeling very complacent about very low volatility to moving towards a more normal market state." He added, " More volatility is not necessarily a bad thing, as more volatility means more trading income."