Barclays Sees Rate Hikes in September and December Amid Hawkish Fed Tone

Barclays has revised its forecast for the Federal Reserve's interest rate hikes. The bank now expects two increases, one in September and another in December, after a recent speech by Fed Chair Kevin Warsh at the Jackson Hole symposium.

In his address, Warsh emphasized that policymakers would need to take action if they were not confident inflation was moving back to the 2% target. He characterized current financial conditions as insufficient to curb demand and stated that the labor market is at or near full employment.

The hawkish tone of Warsh's speech has led Barclays to reassess its earlier prediction of no rate hikes for the remainder of the year. The bank notes that, despite near-term monthly inflation data appearing cooler than longer-term measures, base effects will diminish any apparent improvement in annual figures before December.