Cathay United Bank Says U.S.-Iran War Could Disrupt Fed Rate-Cut Timetable, Remains Bullish on AI

The U.S.-Iran war has driven up global oil prices, raising concerns that higher energy costs could reignite inflation and force the U.S. Federal Reserve to keep interest rates elevated for longer. Cathay United Bank said geopolitical risks have intensified global equity-market volatility, but the outlook for capital spending and long-term growth in technology and AI remains unchanged, keeping the sectors central to its investment strategy.

Cathay United Bank's latest analysis said that if the U.S.-Iran conflict persists and oil prices remain high, the Fed could postpone potential rate cuts until the third quarter of this year or even later. In response to interest-rate and market volatility, the bank recommended increasing holdings of investment-grade bonds and using U.S. dollar positions as a hedge, while continuing to focus equity allocations on the technology and AI sectors.