Why is Barclays predicting a September Fed rate cut?

Barclays expects a September rate cut after Fed Chair Jerome Powell highlighted labor market risks and slowing employment growth, suggesting the central bank may adopt a more cautious, dovish approach.

How many rate cuts does Barclays expect in 2025?

Barclays now forecasts two rate cuts in 2025, one in September and a second in December, reflecting concerns over weakening job growth and economic uncertainties.

What could be the broader impact of the Fed rate cuts?

Potential cuts could ease borrowing costs for consumers and businesses, support investment and spending, and stabilize employment while influencing global capital flows and equity markets.

How are markets reacting to the rate cut forecast?

Markets responded positively, with equities rallying and bond yields declining, as investors priced in an 87% probability of a September cut and welcomed the prospect of lower borrowing costs.

What did Powell say about the labor market?

Powell described the labor market as tight but fragile, warning that slower employment growth could pose risks to economic stability, prompting analysts like Barclays to anticipate rate cuts.

Barclays predicts September Fed rate cut after Powell highlights labor market risks

US Stocks

Barclays Signals September Fed Rate Cut After Powell’s Labor Market Warning

ByRubaisha August 25, 2025August 25, 2025

A Clear Shift Toward Rate Cuts

Barclays, alongside BNP Paribas, has revised its forecast, now expecting the Federal Reserve to implement a 25-basis-point rate cut in September, followed by another in December this year. This represents an important pivot in monetary policy prompted by Fed Chair Jerome Powell’s remarks at the Jackson Hole symposium, where he highlighted growing downside risks to the labor market.