Barclays Sees Two More Fed Rate Hikes Ahead of Jackson Hole Speech

Barclays has revised its interest rate forecast for the US Federal Reserve, predicting two more hikes this year. The banking giant expects a 25 basis point increase in September and another in December. This change comes after Chair Kevin Warsh's recent speech at the Jackson Hole symposium, where he emphasized the need to combat inflation.

Warsh stated that policymakers would have work to do if they lacked confidence in returning inflation to its 2% target. He also noted that inflation is too high, financial conditions are not restrictive, and the labor market is consistent with full employment. This hawkish stance has led Barclays to revise its previous forecast of keeping rates unchanged through the remainder of the year.

Markets have responded to Warsh's remarks by increasing bets on a September rate hike. According to the CME Group's FedWatch tool, investors now assign a 60.4% chance of a rate increase in September. The Fed's policy decision on September 16 will be closely watched for further clues on the rate path.