UBS Sees Two Fed Hikes in 2026 Following Stronger-than-Expected Jobs Report
UBS revised its forecast for Federal Reserve rate hikes in 2026, predicting two 25-basis-point increases. The bank now anticipates a September and December hike, reversing its earlier call for no policy changes this year.
The shift in expectations comes after a stronger-than-expected August jobs report, which saw US employers add 162,000 jobs, exceeding forecasts of roughly 55,000. The unemployment rate remained at 4.1%.
Financial markets were pricing in about a 60.4% probability of a 25-basis-point increase at the Fed's September 15-16 meeting, according to CME's FedWatch tool, up from 59.4% on Friday.
UBS noted that the investment implications would depend on the reason behind any Fed tightening. A rate hike driven by stronger economic growth would have different consequences from one prompted by persistent inflation and weaker growth.