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Citigroup delays Fed rate-cut forecast to 2027 after strong U.S. jobs report
Citigroup now sees three quarter-point cuts in 2027 as stronger payroll gains and steady unemployment shift attention back to inflation.
- On Friday, Citigroup pushed back its forecast for the Federal Reserve's next interest-rate cut to June 2027, citing strong August jobs data that reduced the need for near-term monetary easing.
- The August jobs report showed employers added 162,000 jobs, well ahead of expectations of 53,000, while the unemployment rate held steady at 4.1%, redirecting policymaker attention toward inflation.
- Citi economists Andrew Hollenhorst and Veronica Clark wrote that "the unemployment rate was unchanged and labor force participation rebounded noticeably," replacing their previous forecast with three cuts across next year.
- Traders assigned a 61% probability of a rate hike at the Fed's September 15-16 meeting, as inflation has run above the Fed's 2% target for more than five years.
- Investors now turn to next week's CPI and PPI data for further clues on the Fed's interest-rate path, while Fed Governor Christopher Waller favored holding rates steady as inflation moderates.
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Citigroup's expectations of the Fed's cutback date to next year were delayed, following the job report that showed the US labor market force. Citicorp's analysts expected the Fed to cut interest rates by 25 basis points in June, September, and December next year, compared to its earlier projections in [...] the article "Citigroup" is postponing its expectations of reducing US interest to 2027 written in the Stock Exchange.
While the institution previously expected interest rate cuts in October and December 2026 and January 2027, its new assessment predicts the first cut will occur in June 2027. According to Citi's new forecast, the Fed will...
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