In a report released recently, UBS Wealth Management expects the Fed to raise interest rates by an additional 0.25 percentage points at the September meeting and take a similar step in December. Previously, the institution only expected one rate increase in 2026.
The forecast change comes as the U.S. economy continues to show resilience better than expected. The jobs report released on 9/4 showed that the number of new jobs rose sharply in August, while the unemployment rate remained at 4.1%. The labor market therefore appears to still be healthy enough for the Fed to have more room to focus on the fight against inflation
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Although the UBS has raised its forecast, the Fed’s September decision is still not certain.
The central bank has to balance two objectives assigned by the U.S. Congress: stabilizing prices and maximizing employment. Low interest rates support hiring and growth, but risk making inflation more persistent. Conversely, raising rates helps keep prices in check, but increases borrowing costs and could weaken the labor market.
The August jobs report, stronger than expected, has eased concerns about the second part of this equation. However, the data most decisively for the September 15–16 meeting may be inflation.
The U.S. will release the Producer Price Index (PPI) for August on September 10, followed one day later by the Consumer Price Index (CPI). If the two reports show price pressures continue to cool, the Fed still has grounds to keep interest rates in the 3.5–3.75% range.
According to Yahoo Finance