Barclays says a sharp cooling in the US labour market has heightened expectations the Federal Reserve will soon pivot to rate cuts. The bank’s economists forecast the first move this month, with a 25-basis-point reduction, though some market participants are positioning for a half-point cut.

The bank now expects three cuts in total this year—one at each remaining Fed meeting. Barclays does not anticipate any of those reductions to be 50 basis points unless inflation proves “shockingly low.” Instead, it sees price pressures likely to re-emerge as tariffs feed gradually into consumer costs, forcing the Fed to balance weaker job growth against the risk of a renewed pickup in inflation.

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The Federal Open Market Committee (FOMC) meets on September 16 and 17.

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