Investors expecting an aggressive Fed cut are getting too 'ahead of the curve,' UBS CEO says

The CEO of Swiss banking giant UBS said Thursday that the fight against inflation isn't over yet, and some investors seem to be getting too ahead of themselves in expecting that the U.S. Federal Reserve could pull an aggressive rate cut this month.

"I think the market seems to be a little bit too ahead of the curve in expecting the Fed to go so aggressively,"  Sergio Ermotti, Group CEO of UBS Group AG, told CNBC's "Squawk Box Asia."

The question of whether the Fed will lower rates at the end of its next policy meeting September 18 has largely been answered. The only question that remains is: by how much.

The "most important" issue that the Fed needs consider is still inflation, which remains sticky and not yet "totally under control," Ermotti added.

Data released Wednesday showed that the core U.S. consumer price index, which excludes volatile food and energy prices, increased 0.3% for the month of August, slightly higher than forecasts of a 0.2% climb. 

While the wider CPI, a broad measure of goods and services costs across the U.S. economy, rose 0.2% for the month of August, the uptick in core CPI may undercut the chances of an outsized interest rate cut by the Fed when policymakers meet next week. 

"I would say probably a cut, but not as the market expects," Ermotti said. 

While traders are pricing in around an 85% chance of a 25 bps rate reduction in September, 15% are still pricing in a 50 bps lowering, according to the CME Group's FedWatch Tool. A basis point is 0.01 percentage point.

The Fed's benchmark borrowing rate, which influences a bulk of other rates that consumers pay, is currently at 5.25%-5.50%.

A long-awaited soft landing could still be managed, Ermotti said, adding that other economic data still appear to