Overview
- UBS changed its outlook on Monday, September 7, 2026, abandoning a full-year pause and now forecasting 25 basis-point increases in September and December.
- The bank pointed to Monday's August jobs report, which showed 162,000 payroll gains and unemployment steady at 4.1%, as a key reason the Fed can tighten without immediately raising unemployment.
- UBS also cited a firmer tone from Fed officials at the Jackson Hole symposium and growing inflation risks tied to supply bottlenecks as drivers of its revised call.
- Market pricing moved fast after the data, with the CME FedWatch probability of a September hike rising to about 58%, and other banks including Citigroup and Macquarie raising their rate forecasts.
- Investors are now focused on the September 15–16 FOMC meeting for confirmation and should watch upcoming inflation and jobs releases because higher policy rates would raise borrowing costs for households and businesses.