UBS has updated its projection for Federal Reserve rate cuts in 2025, now expecting a total reduction of 50 basis points, down from the previous estimate of 100 basis points.

The bank predicts two cuts of 25 basis points each, scheduled for June and September, depending on core inflation trends. Analysts anticipate that core inflation will drop below 2.5% by the June Federal Open Market Committee meeting, potentially allowing the Fed to resume easing monetary policy.

The Fed's approach remains dependent on data, with UBS noting that weaker-than-expected labor market or inflation data could result in an earlier rate cut as early as March. The timing of any adjustments will depend on the evolution of economic conditions in the coming months.