London, May 4, 2026, 15:04 BST
- Barclays has scrapped its earlier call for a September U.S. Federal Reserve rate cut in 2026, now seeing none for that year.
- Oil-fueled inflation worries are prompting banks, traders, and Fed officials to pull back from wagers on looser policy.
- Barclays’ London shares sat idle on Monday—no trading, as the London Stock Exchange was shut for the UK’s early May bank holiday.
Barclays PLC scrapped its call for a U.S. Federal Reserve rate cut this year on Monday, shifting gears as the latest big brokerage to predict rates will remain unchanged through 2026, with energy costs fueling persistent inflation. The British bank was previously penciling in a 25-basis-point reduction for September—a basis point equals one-hundredth of a percentage point.
The urgency around the Fed’s next move is clear as rate bets have shifted quickly. Since the central bank kept policy steady last week—its most fractured call since 1992—major brokerages have been scrapping earlier forecasts for U.S. cuts. Iran’s conflict and threats to oil flows are now steering the inflation conversation.
Barclays’ move comes at a time when the market is bracing for patience. CME FedWatch data, quoted by Reuters, shows traders are assigning roughly a 78.7% probability that rates stay put through the end of the year.
Barclays analyst Marc Giannoni told investors the bank’s revised outlook is tied to its new oil-price projections, according to Investing.com. Brent crude is expected to top out at $115 a barrel in the second quarter, with an average of $100 in 2026. Barclays now puts headline PCE inflation—which the Fed watches closely—at 3.8% for 2026, and sees core PCE at 3.1%, both higher than its earlier calls.
Barclays’ Giannoni says the bank doesn’t expect any Fed rate cuts this year, citing core PCE inflation that’s now tracking above 3% through year-end. The FOMC—responsible for setting U.S. rates—“isn’t in a position to cut,” he wrote. Investing
The bank’s revised outlook now lines up more with Morgan Stanley, J.P. Morgan, and HSBC—banks that have also shifted to expecting no rate cuts in 2026. Some rivals haven’t changed their forecasts and still see easing ahead. Morgan Stanley, for its part, abandoned its prediction for two quarter-point cuts this year just last week, citing cooling urgency as inflation and growth readings rolled in.
The call remains a tossup. Barclays analysts see higher oil fueling both headline and core inflation, slowing growth in the process. Still, they flagged another risk: a sharp jump in joblessness could push the Fed to slash rates “more rapidly and aggressively.” Reuters
Fed officials have dialed back on signaling rate cuts. Minneapolis Fed President Neel Kashkari, speaking Sunday, pointed to the Iran war as a fresh source of inflation and demand uncertainty, warning the Fed could even consider raising rates if the situation deteriorates.
Barclays has had its hands full with headlines lately. On May 1, the bank announced the completion of Barclays Bank Delaware’s purchase of Best Egg, the U.S. direct-to-consumer personal loan platform. The move is aimed at growing the bank’s consumer lending footprint in the U.S.
Barclays’ group chief executive C.S. Venkatakrishnan described the U.S. as “a strategically important growth market” for the bank. For Denny Nealon, who leads Barclays US Consumer Bank, the acquisition sharpens its personal lending tools and pushes the consumer bank toward a more digital model. PR Newswire
Alongside its renewed growth drive, Barclays is facing new credit worries. Last week, the bank set aside £228 million after MFS folded and rolled out a £500 million share buyback—short of what analysts were looking for. First-quarter pretax profit still edged up, reaching £2.8 billion from £2.7 billion a year ago.
With the London Stock Exchange shut for the early May bank holiday, Barclays’ London-listed shares didn’t change hands on Monday. Hargreaves Lansdown was quoting Barclays at 434.50p for sellers, 434.75p for buyers—though the market was closed and those prices carried at least a 15-minute delay. ([Trading Hours][8])
[8]: https://www.tradinghours.com/markets/lse “
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