UBS Expects Fed Rate Hikes in September and December 2026

UBS has revised its forecast for Federal Reserve interest rate hikes, now expecting increases in both September and December of next year. This shift comes after a strong U.S. jobs report highlighted the resilience of the labor market. Market behavior suggests growing anticipation of tighter monetary policy, with participants adjusting their expectations accordingly.

The updated forecast marks a departure from UBS's earlier stance of no policy change for the remainder of this year. Instead, the bank now projects 25 basis point rate hikes in both September and December 2026. This development indicates a significant move away from scenarios where the Fed would consistently pause interest rates throughout the year.

Observers will be closely watching upcoming Federal Open Market Committee (FOMC) meetings, particularly those in September and December, for confirmation of rate decisions. Key indicators such as inflation data and employment reports will also play a crucial role in shaping market expectations.