Barclays now expects two Fed cuts this year after Powell signalled an easing bias, with further moves in 2026. The bank also warns of a 50% U.S. recession risk under Trump, with slowing jobs and rising unemployment keeping cuts in play.

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Barclays now expects the Federal Reserve to cut rates twice in 2025, in September and December, after Powell’s Jackson Hole remarks signalled an easing bias. Powell highlighted that risks to full employment are moving up the priority list, opening the door to pre-emptive cuts with backing from moderate FOMC members.

Barclays sees the Fed cutting in 25bp steps at quarterly intervals, with two more moves projected for March and June 2026, leaving rates at 3.25%–3.50% by late 2026.

Separately, Barclays warned of a 50% chance of a U.S. recession under Trump, forecasting slowing jobs growth, unemployment rising to 4.2%, and Fed cuts as the economy softens. Still, the bar for action in September remains high; a strong August jobs report could keep the Fed on hold.