UBS Sees Two Rate Hikes Ahead Amid Strong Jobs Report

UBS has revised its forecast for US Federal Reserve rate hikes in response to a stronger-than-expected jobs report. The brokerage now expects two quarter-point increases, one in September and another in December.

The previous forecast had predicted no policy change this year, but the bank cited hawkish communication from Fed Chair Kevin Warsh's Jackson Hole speech as a key factor in the revision. Rising inflation risks due to supply bottlenecks and August labor data also contributed to the changed outlook.

The US added 162,000 jobs in August, exceeding expectations, while the unemployment rate remained steady at 4.1%. This news follows hawkish remarks from Warsh at Jackson Hole and comments from Fed Governor Christopher Waller, who said he would support keeping rates steady if upcoming data showed easing inflation pressures.

Citigroup and Macquarie have also revised their interest rate forecasts in response to the employment data. Financial markets are pricing in a 58% chance of a quarter-point rate hike at the Fed's September 15-16 meeting, up from 52% on Thursday.