UBS Revises Forecast to Two US Fed Rate Hikes in 2026 After Jobs Report
UBS Updates Interest Rate Outlook Following Strong US Jobs Data
UBS Expects Two Rate Hikes in 2026
Sept 7 (Reuters) - UBS expects the Federal Reserve to raise interest rates by 25 basis points each in September and December, after a stronger-than-expected U.S. jobs report reinforced views of a resilient labor market.
The brokerage had previously expected no policy change this year.
Factors Influencing UBS's Revised Forecast
"However, hawkish communication, particularly (Fed Chair Kevin) Warsh's Jackson Hole speech, rising inflation risks from supply bottlenecks, and August labor data have come in strong enough to change that call," UBS Global Wealth Management said in a note on Friday.
US Labor Market Performance
U.S. employers added 162,000 jobs in August, comfortably ahead of expectations, while the unemployment rate held steady at 4.1%, data showed on Friday.
Other Financial Institutions Adjust Forecasts
Citigroup and Macquarie also revised their interest rate forecasts following the employment data.
Impact of Fed Officials' Remarks
The jobs report followed hawkish remarks from Warsh at the Jackson Hole symposium in August. Separately, Fed Governor Christopher Waller said he would support holding rates steady if upcoming data showed inflation pressures continued to ease.
Market Reactions to Rate Hike Expectations
Financial markets are pricing in a roughly 58% chance of a quarter-percentage-point rate hike at the Fed's September 15-16 meeting, up from 52% on Thursday, CME's FedWatch tool showed.
(Reporting by Kanchana Chakravarty and Joel Jose in Bengaluru; Editing by Mrigank Dhaniwala)
