Barclays Predicts Steady Fed Rates Amidst Geopolitical Tensions

Barclays forecasts the U.S. Federal Reserve will keep interest rates unchanged in 2026 due to prolonged higher energy prices from the Iran conflict, impacting inflation and economic growth. Initially, Barclays expected a 25 basis point rate cut in September 2026.

Barclays has revised its forecast, now predicting that the U.S. Federal Reserve will maintain stable interest rates through 2026. This prediction comes in light of sustained high energy prices resulting from ongoing geopolitical tensions in Iran.

Originally, the financial institution had anticipated a 25 basis point reduction in interest rates by September 2026. However, the shockwaves from the Iran war are expected to exert upward pressure on inflation, slowing overall economic growth.

The bank communicated these insights in a note issued this Monday, signaling caution amid the uncertain global economic landscape.