Barclays Sees Two More Rate Hikes After Warsh Hawkish Remarks

Barclays has upgraded its interest rate forecast after Federal Reserve Chair Kevin Warsh's speech at the Jackson Hole symposium. The brokerage now expects two more Fed rate hikes this year, a 25 basis point increase in September and another in December.

Warsh signalled a more hawkish stance by saying policymakers would 'have work to do' if they lacked confidence that inflation was returning to the central bank's 2% target. He emphasized that inflation is too high, financial conditions are not restrictive, and the labor market is consistent with full employment.

Barclays described Warsh's speech as 'notably hawkish,' despite his continued opposition to providing explicit forward guidance. The brokerage still expects monthly inflation readings to come in much softer than the longer-horizon measures emphasized by Warsh.