Barclays expects the US Fed to deliver two 25 bps rate cuts each in September 2026 and March 2027 vs the prior forecast of cuts in June and September this year

Barclays has revised its forecast for U.S. Federal Reserve rate cuts, now anticipating two 25-basis-point reductions in September 2026 and March 2027, compared to its previous expectation of cuts in June and September 2026 according to market analysis. This adjustment follows recent labor market data showing slower-than-expected employment growth in December 2026, alongside a decline in the unemployment rate to 4.4% and resilient wage growth as reported. The updated outlook aligns with broader shifts among major financial institutions, as Goldman Sachs and JPMorgan also pushed back their rate-cut projections in response to the evolving economic landscape according to analysis.

Goldman Sachs, which previously anticipated a March 2026 cut, now expects a reduction in December 2026, while JPMorgan has withdrawn its earlier forecast for a January 2027 cut, instead predicting a rate hike in the third quarter of 2027 according to forecasts. Macquarie maintained its stance for a December 2026 hike, and Morgan Stanley revised its timeline to June and September 2026, from January and April as noted. The adjustments reflect cautious optimism about labor market stability, with analysts noting that while disinflation is progressing, it remains gradual according to market commentary.

Market expectations also shifted, with traders assigning a 95% probability to the Fed maintaining rates unchanged at its January 2026 meeting, up from 86% prior to the data release according to trading data. The central bank’s policy trajectory remains contingent on future economic signals, including labor market trends and inflation developments as indicated.