20 Wall Street Banks Revise Fed Rate Outlook for 2026
AI Market Summary
Hotter-than-expected US August inflation has shifted the Street toward a September Fed hike, with 16 of 20 banks now projecting tightening and most expecting additional hikes through 2026. This repricing lifts the front end of rates and reinforces a higher-for-longer narrative, pressuring duration-sensitive risk assets and tightening financial conditions. The most direct near-term expression is likely firmer USD expectations.
Impact level
● High
Affected assets
NCSIDXY2USD/USDT+0.02%
AI Insight · NCSIDXY2USD/USDTAI Insight
▼ Bearish
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US August inflation printed slightly above expectations, quickly pushing up market and analyst conviction that the Federal Reserve could deliver a rate hike at its September meeting. Estimates suggest that most Fed watchers who had not been looking for a September move shifted their calls after the data.
Among 20 institutions tracked, 16 now see the Fed's next step as a September hike. A smaller group still expects policy to stay on hold, while a few continue to pencil in cuts starting in 2027.
Bank of America forecasts a September hike and a cumulative 75 basis points of tightening through 2026. Barclays, BNP Paribas, Citigroup, MPA Macro, MUFG, Nomura, Piper Sandler, Societe Generale, TD Securities, UBS and Wells Fargo also look for the first hike in September, with total tightening of 50 basis points over 2026. Deutsche Bank and RBC also anticipate a September hike and project 75 basis points of increases by 2026. Goldman Sachs and JPMorgan expect a September hike as well, but see total tightening limited to 25 basis points for the year.
Institutions' current Fed forecasts:
- Bank of America: Rate hike in September; total +75 bps by 2026.
- Barclays: Rate hike in September; total +50 bps.
- BNP Paribas: Rate hike in September; total +50 bps.
- Citigroup: Rate hike in September; total +50 bps.
- Deutsche Bank: Rate hike in September; total +75 bps.
- Goldman Sachs: Rate hike in September; total +25 bps.
- HSBC: Rates to remain stable for an indefinite period; no change in 2026.
- Jefferies: First move a 25 bps rate cut in December.
- JPMorgan: Rate hike in September; total +25 bps.
- Morgan Stanley: First rate cut in 2027; no change in 2026.
- MPA Macro: Rate hike in September; total +50 bps.
- MUFG: Rate hike in September; total +50 bps.
- Nomura: Rate hike in September; total +50 bps.
- Oxford Economics: First rate cut in 2027; no change in 2026.
- Piper Sandler: Rate hike in September; total +50 bps.
- RBC: Rate hike in September; total +75 bps.
- Societe Generale: Rate hike in September; total +50 bps.
- TD Securities: Rate hike in September; total +50 bps.
- UBS: Rate hike in September; total +50 bps.
- Wells Fargo: Rate hike in September; total +50 bps.
This is not investment advice.
