European bank UBS predicts a US recession next year and a significant reduction in interest rates from the Federal Reserve due to falling inflation and economic recession.

The bank expects the Fed to cut rates by 275 basis points, four times the 75-basis-point decrease expected by the market.

Analysts are expecting rates to fall to 1.25% in the first half of 2025.

Despite the tightening campaign, the US economy has avoided a recession, with GDP growing 4.9% in Q3.