Fed seen cutting rates by 25 bps in September

Federal Reserve headquarters

Both Barclays and BNP Paribas anticipate the US Federal Reserve will cut interest rates by 25 basis points (bps) at its September meeting, citing a shift in tone from Fed Chair Jerome Powell at the Jackson Hole Symposium, where he highlighted rising risks in the labor market.

Barclays revised its outlook, now expecting two rate cuts this year, one in September and another in December, each by 25 bps. This is a notable change from its previous forecast, which anticipated the first rate cut in September 2026.

BNP Paribas also expects two cuts in September and December, after previously projecting that the Fed would hold rates steady.

Deutsche Bank similarly revised its outlook, now expecting two cuts of 25 bps each in September and December, up from its earlier expectation of only one cut this year.