UBS Raises Interest Rate Hike Forecast After Strong August Jobs Report

UBS has revised its interest rate forecast for the US Federal Reserve following a stronger-than-expected jobs report. The brokerage now expects two 25 basis point rate hikes in September and December, up from no policy change previously anticipated.

The strong August labor data, which showed employers added 162,000 jobs and the unemployment rate held steady at 4.1%, has reinforced views of a resilient labor market. This comes after hawkish communication from Fed Chair Kevin Warsh's Jackson Hole speech and rising inflation risks from supply bottlenecks.

Citigroup and Macquarie have also revised their interest rate forecasts following the employment data, with financial markets pricing in a roughly 58% chance of a quarter-percentage-point rate hike at the Fed's September 15-16 meeting.