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UBS UBS CEO Sergio Ermotti does not expect a recession to hit the United States anytime soon, despite a massive sell-off last week triggered by worries of a downturn in the world’s largest economy.
“Not necessarily a recession, but definitely a slowdown is possible,” the head of the Swiss investment bank told CNBC on Wednesday.
Ermotti added, that he expects the U.S. Federal Reserve to cut rates in September and that market volatility could intensify in the second half of the year.
His comments come a week after the stock market experienced a massive global sell-off on Aug. 5, with the Dow DOW dropping over 1,000 points and the Nasdaq NDAQ losing almost 600 points. The bloodbath in the stock market was set off by several factors, including renewed concerns about a potential recession in the U.S. due to rising unemployment rates.
The selloff raised further worries about the stability of the U.S. economy and what the Federal Reserve could do to prevent a recession.
“The macroeconomic indicators are not clear enough to talk about recessions, and actually, it’s probably premature. What we know is that the Fed has enough capacity to step in and support that, although it’s going to take time, whatever they do to be then transmitted into the economy,” Ermotti told the outlet.
He added that he expects the Federal Reserve to cut rates by at least 50 points this year. In July, the central bank kept rates at a 23-year high of 5.25% to 5.5%. Their next meeting starts on September 17.
Ermotti also said he expects market volatility to intensify in the second half of the year, partially due to the U.S. election in November.