Barclays Revises Forecast to Two Fed Rate Hikes Following Warsh’s Jackson Hole Speech
Following a hawkish speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium, Barclays has revised its forecast and now expects two 25-basis-point rate hikes in September and December. Previously, it had predicted no changes through year-end. The Fed's current benchmark federal funds rate is between 3.5% and 3.75%. While near-term inflation data may appear cooler due to base effects, Barclays warned that this could mask underlying price pressures before December. Warsh emphasized the need for continued tightening if confidence in returning inflation to a 2% target remains low. He avoided providing explicit forward guidance but stressed policy discipline over preordained decisions. The market responded with increased odds of a September rate hike—now at 60.4%, per CME Group’s FedWatch tool—and rising Treasury yields. Cleveland Fed President Beth Hammack also supported higher rates, citing persistent inflation above the target for more than five years and insufficient financial conditions to curb demand.
Topics: Barclays Federal Reserve interest rates Jackson Hole