Barclays bets no Fed cuts in 2026
- Barclays dropped its call for a September 2026 Fed cut on May 4, saying war-linked energy prices could keep inflation too hot for easing. - The old Barclays forecast was one 25-basis-point cut in September 2026; now it sees no cuts this year and one in March 2027. - The real fight is oil versus jobs — whether an energy shock or softer hiring ends up steering Fed policy.
Interest-rate forecasts sound dry, but this one lands in places people actually feel — mortgages, credit cards, car loans, and stock valuations. Barclays just changed its call in a more hawkish direction. On May 4, it scrapped its forecast for a September 2026 Fed cut and said it now expects no cuts at all this year, with the first move pushed to March 2027. The reason is simple enough: if war-driven oil and energy costs keep inflation sticky, the Fed has less room to ease. (money.usnews.com) ### What exactly did Barclays change? Barclays had been looking for one quarter-point cut in September 2026. Now that cut is gone. The bank still expects a 25-basis-point reduction in March 2027, but the key shift is that 2026 is no longer an easing year in its base case. That puts Barclays into a growing camp of forecasters backing away from earlier rate-cut expectations. (money.usnews.com) ### Why does oil matter so much here? Because the Fed is trying to get inflation back to target, and energy shocks can leak into everything else. Higher oil prices raise gasoline and transport costs fast, but they also feed into shipping, foo(money.usnews.com)evated longer than markets had hoped. (money.usnews.com) ### Is this just Barclays being dramatic? Not really — but it is one side of a real debate. UBS voices have argued the oil shock may not be permanent and that inflation could cool again if crude prices settle back. There is also the labor-mar(money.usnews.com) truth. It is a forecast fight about which signal breaks first. (finance.yahoo.com) ### What are markets pricing? Markets do not look fully convinced by the no-cuts story. CME’s FedWatch tool tracks rate expectations from fed funds futures, and it shows traders still assigning probabilities to changes over the coming meetings rather than locking in a flat path. In(finance.yahoo.com)gument. (cmegroup.com) ### Why does this matter outside Wall Street? Because Fed timing changes the price of money everywhere. If cuts get pushed out, borrowing stays expensive longer. That hits homebuyers, companies refinancing debt, and anyone hoping lower rates would support risk assets. A delayed cutting cycle also tends (cmegroup.com)ing on cheaper money ahead. (money.usnews.com) ### What would make Barclays wrong? A calmer oil market is the obvious one. If the geopolitical risk premium fades and energy prices stop climbing, the inflation scare weakens. A sharper slowdown in jobs or consumer demand would matter too. T(money.usnews.com)forecast is really a judgment about which pain arrives first. (finance.yahoo.com) ### So what is the real takeaway? This is less about one bank’s note than about a regime shift in expectations. Just months ago, the question was how many cuts might come. Now the live question is whether 2026 gets any at all. Barclays answered no. The market has not fully agreed yet. (money.usnews.com) The bottom line is that the Fed path now looks hostage to two things ordinary people can recognize instantly — gas prices and job security. If oil stays high, cuts get delayed. If the economy cracks first, that call can flip fast.
