Barclays Expects Fed to Delay Rate Cuts as Inflation Risks Persist
Economists at Barclays said on Friday that they now expect the U.S. Federal Reserve to delay its first interest rate cut until September instead of June. The revised forecast reflects a stronger inflation outlook and rising risks to headline inflation linked to the ongoing conflict with Iran.
The brokerage noted that higher energy prices and broader geopolitical tensions could keep inflation elevated for longer than previously anticipated. As a result, the Federal Reserve may remain cautious about easing monetary policy in the near term.
Barclays has also revised its outlook for additional rate cuts. The bank now expects the next reduction to occur in March 2027 rather than December of this year.
Under the updated forecast, Barclays anticipates only one 25-basis-point rate cut in 2026, followed by another rate reduction in 2027. This more gradual easing path reflects concerns that inflation may remain stubbornly above the Federal Reserve’s target.
