UBS Sees Two 2026 Rate Hikes as Strong Jobs Data Shifts Outlook

UBS has revised its interest rate forecast following a stronger-than-expected US jobs report. The brokerage now expects two Federal Reserve rate hikes in 2026, up from no policy change previously anticipated.

The strong August labor data showed U.S. employers added 162,000 jobs, comfortably ahead of expectations, while the unemployment rate held steady at 4.1%. This has reinforced views of a resilient labor market and changed the call for interest rate hikes.

Hawkish communication from Fed Chair Kevin Warsh's Jackson Hole speech and rising inflation risks from supply bottlenecks have also contributed to the revised forecast.