Barclays Delays Rate Cut Forecast Amid Inflation Concerns

Barclays has joined Goldman Sachs in postponing its forecast for the first U.S. Federal Reserve rate cut to September due to increased inflation risks from Middle East tensions. Barclays also revised its inflation outlook and now anticipates only one rate cut this year, reflecting heightened economic uncertainty.

In a notable shift, Barclays has joined Goldman Sachs in deferring its forecast for the U.S. Federal Reserve's initial interest rate cut this year to September. The move is attributed to escalating inflation threats, driven primarily by Middle Eastern geopolitical tensions.

Barclays' analysis highlights higher-than-anticipated U.S. inflation and the potential for oil-induced price hikes, leading to a cautious outlook on the Fed's inflation control. The bank postponed its December rate cut projection to March 2027, expecting only a single reduction this year.

As the Federal Reserve faces ongoing economic challenges, the financial sector's expectations have shifted. Traders now foresee just one rate cut by June 2027, amid lingering uncertainties about inflation and economic resilience.