Barclays prices no Fed cuts
- Barclays dropped its call for a September 2026 Fed cut on May 4, joining firms now expecting no easing this year as oil-fed inflation lingers. - The Fed still targets 3.50% to 3.75%, and futures have swung from pricing two cuts in January to effectively none now. - Friday’s May 8 jobs report matters most now — a softer labor market is the main path back to cuts.
Interest-rate forecasts changed fast this week. Barclays scrapped its call for a 2026 Federal Reserve cut and moved into the no-cuts camp. That matters because the market had already been drifting that way, and Barclays basically confirmed the shift. The new logic is simple — if energy prices stay high and inflation stays sticky, the Fed has much less room to ease. (kitco.com) ### What did Barclays actually change? Barclays had been looking for a 25-basis-point cut in September 2026. On Monday, May 4, it dropped that forecast and said it now expects no policy easing this year. The bank tied the change to prolonged high energy prices linked to the Iran war, which it thinks will keep inflation elevated for longer than it expected before. (kitco.com) ### Why do oil prices matter so much? Because the Fed does not just care about one month of gasoline pain. Energy shocks can leak into transport, food, manufacturing, and inflation expectations more broadly. If policymakers think higher oil is becoming a wide(kitco.com)come from a geopolitical shock rather than a weak economy. (kitco.com) ### Where is the Fed right now? The Fed’s target range is still 3.50% to 3.75%. It kept rates there in March, and that range was still intact after the late-April meeting as officials weighed inflation risks against any cooling in growth and hiring. So the im(kitco.com). (federalreserve.gov) ### What are markets pricing now? At the start of 2026, fed-funds futures were pricing in two quarter-point cuts this year. That has now been mostly erased. Reuters’ May 5 market read framed the current setup as no moves this year unless the labor market weakens enough to reopen the ar(federalreserve.gov) slowdown would force them back onto the table. (money.usnews.com) ### Why is the jobs report suddenly the hinge? Because inflation fears have buried the easy-cut story, so labor weakness is the remaining catalyst. Reuters flagged this week’s U.S. employment report, due Friday, May 8, as the key test of whether th(money.usnews.com)acks, markets will start rebuilding cut bets. (money.usnews.com) ### Is the labor market actually cracking? Not cleanly. Fresh data on March job openings showed openings slipped, but hires jumped sharply. That is not a recession signal by itself. It fits the broader picture of a labor market that is cooler than (money.usnews.com)so much weight. (money.usnews.com) ### Why does this matter beyond Wall Street? Fed cuts shape mortgage rates, corporate borrowing, credit cards, and the general cost of money. A no-cuts year means households and businesses may be stuck with restrictive financing conditions longer tha(money.usnews.com) risk has become harder to ignore again. (money.usnews.com) ### Bottom line? Barclays did not start the move, but it made the shift harder to dismiss. Right now the base case is simple — the Fed stays put, oil keeps the inflation story alive, and Friday’s jobs report decides whether that view hardens or starts to crack. (kitco.com)
