The market estimates a probability close to 25% that the Federal Reserve (Fed) will raise the interest rate by 25 basis points by December 2023. On the other hand, the bank Barclays projects cuts of 25 basis points for September 2026 and March 2027, conditioned on the continuation of disinflation.
According to the financial institution, the future interest rate reduction should not be postponed solely due to rising oil prices. Thus, Barclays emphasizes that core inflation has not shown consistent acceleration in recent months, which reinforces its forecasts.
Furthermore, inflation expectations for the next 5 to 10 years continue to decline in the market. The index prepared by the University of Michigan, which measures this expectation, remained stable at 3.2%, indicating a scenario of moderate inflation in the medium term.
According to Barclays, there are no recent signs from the Federal Open Market Committee (FOMC) suggesting a more aggressive stance, known as hawkish. Therefore, the most likely risk is that interest rates will remain high for a prolonged period, without significant changes.
The bank also warns of possible negative consequences in the labor market caused by rising energy costs. The increase in commodity prices is mainly linked to geopolitical tensions in the Middle East, which have been affecting global supply.
Finally, Barclays recommends caution to avoid misinterpretations regarding the Federal Reserve’s response to the current geopolitical scenario. The institution highlights that monetary policy should not be confused with ad hoc reactions to external shocks, maintaining focus on the structural factors of inflation.
