Barclays bets no Fed cuts

Interest rates are back to being an oil story. That is the simplest way to read Barclays dropping its call for a 2026 Federal Reserve rate cut and moving into the no-cuts camp on May 4. The stakes are big because rate-cut timing runs straight into mortgages, stock valuations, credit costs, and how much room the Fed has if growth weakens. What changed is not some sudden boom. It is a fresh fear that war-driven energy prices will keep inflation sticky enough to block easing. (money.usnews.com) ### What did Barclays actually change? Barclays had been looking for a 25-basis-point cut in September 2026. It scrapped that call and now expects the Fed to hold steady through the rest of this year, while still keeping a quarter(money.usnews.com)tors wanted earlier in the year. (money.usnews.com) ### Why does oil matter so much here? Because oil does not stay in the gas tank. Higher crude feeds into gasoline, shipping, airfares, plastics, and a lot of business costs that eventually show up in consumer prices. Barclays’ bas(money.usnews.com)he catch is that energy can also slow growth at the same time — so the Fed gets squeezed from both sides. (money.usnews.com) ### But doesn’t the Fed usually look through energy spikes? Sometimes, yes. A one-off jump is easier to ignore. A long, messy shock is different, especially if it starts bleeding into wages, services, and inflation expectations. T(money.usnews.com) energy stops being a temporary nuisance and becomes a broader inflation problem. (money.usnews.com) ### Are markets buying this story? Mostly, yes. Futures markets have swung hard toward “higher for longer.” CME FedWatch showed roughly a 95.2% probability of no change at the June 16-17, 2026 meeting, with only a small chance of (money.usnews.com)nce of any cut this year. (bingx.com) ### Why does this hit mortgages and stocks? Because long-term borrowing costs move on expectations for the whole rate path, not just the next meeting. If traders think the Fed stays restrictive for longer, Treasury yields tend to stay elevated, and mortgage rates do(bingx.com)lp from falling discount rates, and housing stays under pressure because financing never really loosens. This is also why Barclays has been talking about inflation risk and equity upside in the same breath. (newsbreak.com) ### Is this now the consensus? Not completely, but the center of gravity has moved. The Fed itself signaled only one cut for 2026 in its latest projections, and markets are even more skeptical near term. Barclays is not making a wild outlier call anymore. It is leaning into a view that has become much easier to defend as oil stays high and inflation progress looks fragile. (foxbusiness.com) ### What would break this no-cuts view? A sharper labor-market slowdown is the obvious one. If hiring rolls over or unemployment jumps, the Fed could decide growth risk matters more than inflation risk. A clean drop in oil would help too. But until one of those happens, the message f(foxbusiness.com)ut. (msn.com) ### Bottom line This is not really a story about one bank changing a forecast. It is a story about how quickly the market’s old “cuts are coming” script can die when inflation gets a new source of fuel. Barclays just made that shift explicit. (money.usn([msn.com)uts-in-2026))