Barclays economists have revised their forecast for the timing of the Federal Reserve's next interest rate cut, now expecting the central bank to lower rates in September rather than June.

A Barclays team, including Marc Giannoni and Jonathan Millar, wrote in a report on Friday, "This adjustment primarily reflects our upward revision to the PCE inflation outlook and increased upside risks to inflation stemming from the conflict involving Iran."

Barclays now anticipates that the Fed will cut interest rates by 25 basis points to a range of 3.25%–3.50% at the September Federal Open Market Committee (FOMC) meeting, followed by another 25-basis-point reduction in March 2027.

The bank had previously projected that the Fed would implement rate cuts in June and December.

The Barclays team stated, "Should inflationary pressures persist longer than expected, we anticipate the FOMC will further delay rate cuts."

"Conversely, if the unemployment rate rises abruptly—for example, due to a sharp increase in energy prices and their negative impact on economic activity—we expect the FOMC to cut rates more quickly and aggressively."