Barclays reversed its previous forecast of no Federal Reserve rate changes in 2026 and now expects two 25-basis-point increases, in September and December. After Federal Reserve Chair Kevin Warsh’s hawkish Jackson Hole keynote on August 28—his first there since taking office on May 22—he said softer inflation prints had not shown meaningful improvement in the underlying trend, cited July PCE inflation at 3.3% versus the Fed’s 2% target, and warned the Fed retains the willingness and obligation to act without confidence in a sustained return to target. He also criticized excessive forward guidance, described the economy as close to full employment with stress in housing and agriculture, and pointed to artificial intelligence as a potential long-run growth lift. Bond markets reacted quickly: reports put the two-year Treasury yield up about 9 to 12 basis points, the 10-year yield at 4.77%, its highest since January 2025, and the US dollar index up roughly 0.3% to 0.6%, while market-implied odds of a September hike jumped from the mid-30% to about 40% range before the speech toward more than 50% afterward and later stood at 66% on CME FedWatch on August 31. Renewed Middle East hostilities, higher oil prices and hawkish Fed signals pushed the British pound toward $1.35 as markets priced around 32 basis points of Bank of England tightening by year-end.