"UBS Strategists Warn of 'Real Risk' as Fed Considers Hiking Rates to 6.5%"

UBS Group AG strategists warn that the Federal Reserve may raise interest rates to as high as 6.5% next year due to strong US growth and persistent inflation, despite the bank's base case for two rate cuts this year. The possibility of inflation not declining to the Fed's target could prompt a shift back to rate hikes, leading to a significant selloff in bonds and stocks, as markets have already reduced expectations for policy easing in light of robust US economic data.