UBS: Politicalization of the Federal Reserve could trigger threefold economic risks.

UBS stated that Federal Reserve Chairman Powell's speech at Jackson Hole showcased his "classic Powell style" by signaling an increased probability of a rate cut in September to offset the drag from trade tariffs, but lacking guidance for economies facing structural changes. The market welcomed the rate cut hints, but the bank believes that at its core, the message is essentially a "data-dependent rhetoric wrapped in fancy language." UBS pointed out that Powell did not make a stronger defense of the Fed's independence, and a politically influenced Fed under Trump could lead to: 1) reigniting uncertainty about inflation; 2) potentially adding an extra percentage point to real borrowing costs; 3) creating chain reactions in fiscal policy, corporate investment, housing affordability, household savings, and speculative activities.