TLDR
- UBS now expects two 25 basis point Fed rate hikes in September and December 2026
- A stronger-than-expected August jobs report drove the forecast change
- US employers added 162,000 jobs in August; unemployment held at 4.1%
- Fed Chair Kevin Warsh’s hawkish Jackson Hole speech also influenced the call
- Markets are pricing in a 58% chance of a September rate hike, up from 52%
UBS has changed its interest rate forecast after a strong US jobs report came in better than expected in August 2026. The bank now expects the Federal Reserve to raise rates twice this year.
JUST IN: 🇺🇸 UBS Global Wealth Management expects the U.S. Fed to deliver 25 bp rate hikes in September and December 2026, vs prior forecast of no policy change. pic.twitter.com/FagOYzoTtX
— Whale Insider (@WhaleInsider) September 7, 2026
UBS Shifts Its Rate Forecast
UBS Global Wealth Management had previously expected no rate changes in 2026. That view has now changed.
The bank now calls for two 25 basis point hikes from the Fed, one in September and one in December. That is a full reversal from its earlier position.
The shift was driven by three things: hawkish comments from Fed officials, rising inflation risks from supply bottlenecks, and strong labor market data.
Fed Chair Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium in August. That speech was a key trigger for several banks revisiting their rate outlooks.
Separately, Fed Governor Christopher Waller said he would back holding rates steady if inflation pressures continued to ease. That shows some division within the Fed.
August Jobs Report Stronger Than Expected
The August jobs report showed US employers added 162,000 jobs last month. That came in ahead of analyst expectations.
The unemployment rate stayed flat at 4.1%. A stable unemployment rate alongside strong job creation points to a labor market that is holding up well.
That kind of data gives the Fed more room to raise rates without worrying about pushing unemployment higher.
UBS was not alone in revising its outlook. Citigroup and Macquarie also updated their interest rate forecasts after the employment data was released.
Market Reaction
Financial markets moved quickly after the jobs report. The probability of a September rate hike jumped to 58%, up from 52% the day before.
That data comes from the CME FedWatch tool, which tracks market expectations for Fed policy moves.
The September 15-16 Fed meeting is now a closely watched event. Markets will be looking for any signal on whether the central bank will move rates at that meeting.
Supply chain pressures and inflation risks remain in the background. UBS pointed to these as part of the reason for its updated call.
The strong jobs data, combined with hawkish Fed communication, has shifted expectations across Wall Street. More banks may follow with updated forecasts in the days ahead.
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