UBS Wealth Management’s CIO now expects the Federal Reserve to raise interest rates twice in 2026, with 25-basis-point increases in September and December. The forecast marks a shift from the bank’s previous view that rates would remain unchanged throughout 2026. Stronger U.S. employment growth reported last Friday and July personal consumption expenditures (PCE) inflation of 3.7% year over year, above expectations, have reinforced a more hawkish Federal Reserve stance. Market pricing for a September rate increase has risen from about 50% to about 60%. UBS expects the federal funds target range to move from 3.50%-3.75% to 4.00%-4.25%.