UBS CEO warns investors against getting too ahead of the curve with expectations of an aggressive Fed cut.

• The CEO of Swiss banking giant UBS stated that the markets may be moving too quickly, causing the U.S. Federal Reserve to implement an aggressive rate cut.
• "Sergio Ermotti, Group CEO of UBS Group AG, stated on CNBC's "Squawk Box Asia" that he believes the market is anticipating the Fed to act more aggressively than expected."

UBS CEO stated on Thursday that the battle against inflation is not yet over, and certain investors are becoming overly optimistic about the possibility of an aggressive rate cut by the U.S. Federal Reserve in the near future.

"Sergio Ermotti, Group CEO of UBS Group AG, stated on CNBC's "Squawk Box Asia" that he believes the market is anticipating the Fed to act more aggressively than expected."

The Fed's decision to lower rates at its next policy meeting on September 18 is now clear, but the only uncertainty is the extent of the rate cut.

Ermotti stated that the most pressing concern for the Fed is still inflation, which remains stubborn and has not yet been fully controlled.

The core U.S. consumer price index, excluding food and energy prices, rose 0.3% in August, slightly above predictions of a 0.2% increase.

The increase in core CPI, a narrower measure of inflation, may reduce the likelihood of a significant interest rate cut by the Fed during their upcoming meeting.

Ermotti stated that he believed there would likely be a reduction, but not as the market anticipated.

According to the CME Group's FedWatch Tool, while 85% of traders are pricing in a 25 bps rate reduction in September, 15% are still pricing in a 50 bps lowering, with a basis point being 0.01 percentage point.

The benchmark borrowing rate set by the Fed, which affects a wide range of rates that consumers pay, is currently between 5.25% and 5.50%.

Ermotti stated that a soft landing could still be achieved, as other economic indicators suggest.

"Although there is some stickiness in the inflation, consumers are managing well. For now, the outlook is consistent with a soft landing, and we remain optimistic about the situation."

UBS CEO Sergio Ermotti expressed his optimism on Asia, stating that while the region is experiencing strong growth, it is not immune to challenges posed by geopolitics and the global economic outlook.

Ermotti reaffirmed the bank's dedication to China, stating, "We have been in China for more than 50 years, and we're going to be there for the next hundred, 200 years."

UBS exceeded profit expectations for the second quarter, reporting $1.136 billion in net profit attributable to shareholders, despite implementing cost-cutting measures and generating higher revenue from its global wealth management and investment banking divisions. The company's forecast was $528 million.

Ermotti stated that the U.S. and Asia, particularly China, remain the two primary growth opportunities for us.