More than a dozen banks are expecting the Federal Reserve to raise interest rates by 25 basis points when the Federal Open Market Committee (FOMC) meets on September 16.
Nine major Wall Street institutions—UBS, HSBC, Barclays, Citigroup, Wells Fargo, Morgan Stanley, Goldman Sachs, Bank of America, and JPMorgan Chase—all anticipate the quarter-point hike. The CME Fedwatch tool prices an 87.3% probability of a 25 basis point increase, up from 61.9% at the end of August.
What Changed Wall Street's Outlook
August's core consumer price index rose 0.3% month-on-month, exceeding the 0.2% consensus forecast. Federal Reserve Chair Kevin Warsh warned at Jackson Hole that the central bank must ensure underlying inflation is moving toward its target "clearly and at sufficient speed."
Personal consumption expenditures inflation is running at 3.7%, while crude oil has pushed above $100 per barrel. The federal funds target currently sits at 3.50% to 3.75%.
Banks' Rate Projections
Beyond September, banks have outlined varied expectations for future Fed actions:
- JPMorgan and Goldman Sachs recently shifted to expect September hikes after previously holding different positions
- HSBC sees hikes in September and December
- Deutsche Bank projects moves in September, December, and March 2027
- Barclays shifted to September and December hikes following Warsh's Jackson Hole speech
- Bank of America forecasts 75 basis points of total hikes in 2026
- UBS projects 50 basis points of tightening by year-end
- Morgan Stanley expects two hikes, along with an ECB move in the near term
The FOMC's two-day meeting begins September 15, with the rate decision due September 16—the same day as a Senate CLARITY Act cloture vote.
