UBS Chief Ermotti Warns ‘Unclear’ US Tariff Impact Clouding Fed Policy Outlook

UBS CEO Sergio Ermotti reportedly said the impact of global tariffs on the U.S. economy is still not clear, which makes it difficult to chart the Federal Reserve’s interest rate policy.

“In the U.S., we still believe that growth will be there, but the inflation question and how it plays out into the central bank’s policies remains open,” Ermotti said in an interview with Bloomberg Television.

The U.S. central bank is widely expected to deliver a rate cut next week after the Fed policymakers’ meeting on Sept. 16-17. Several investment banks have projected a total of three 25-basis point cuts by the end of the year.

“The true issue on tariffs will be seen on consumers,” the chief of Switzerland’s largest bank said. “In the U.S., we need to see exactly if there is an inflationary aspect of tariffs. I think it’s unclear.”

Retail sentiment on Stocktwits about SPDR S&P 500 ETF Trust (SPY) was in the ‘neutral’ territory at the time of writing. At the same time, traders were ‘extremely bearish’ about the Invesco QQQ Trust Series 1 (QQQ) ETF, which tracks the top 100 Nasdaq-listed firms.

The Fed, led by Chair Jerome Powell, is under immense pressure from the Trump administration to lower interest rates. “Incompetence is more important than to defend theoretical independence,” Trump wrote earlier this week on a social media post, after criticizing the U.S. central bank.

Signs are emerging that the labor market is likely seeing a slowdown. On Tuesday, the Bureau of Labor Statistics significantly revised down the number of job additions between April 2024 and March 2025.

However, Goldman Sachs CEO David Solomon noted earlier this week that the Federal Reserve should not rush into cutting interest rates. “It just doesn’t feel to me like the policy rate is extraordinarily restrictive when you look at risk appetite,” Solomon said at a Barclays financial-services conference.

The markets are now focusing on the crucial August inflation data, due out on Thursday.

UBS Chief Ermotti also noted that the global economy is becoming bifurcated, with one driven by technology and artificial intelligence, and the other that is more traditional.

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