UBS anticipates the Federal Reserve will cut interest rates by year-end, citing declining inflation and a weakening U.S. labor market. The financial institution highlights that March inflation data was milder than expected, with core inflation likely to decrease further as tariff impacts wane. UBS suggests these factors bolster the case for a rate cut. The report also points to signs of labor market weakness, including declining average weekly working hours and slowing wage growth. UBS warns that further declines in labor demand could lead to a rapid rise in unemployment rates. The institution expects the Fed to adopt a more dovish policy stance, with many policymakers supporting a reduction in interest rates to around 3%. UBS predicts an additional 50 basis points cut in interest rates by the end of the year, creating a supportive environment for stocks and a positive outlook for high-quality bonds.