Citi Delays Fed Rate Cut Forecast to June 2027 Amid Strong Labor Market Data
Citigroup has pushed back its forecast for the Federal Reserve's first interest rate cut to June 2027, nine months later than previously anticipated. This revision comes after a strong US jobs report in August, which added 162,000 new positions and exceeded economists' expectations of just 53,000.
The stronger-than-expected labor market data has shifted the Fed's attention towards inflation concerns rather than supporting job growth through rate cuts. As a result, Citi's economists now expect the first interest rate cut to occur in June 2027, with subsequent reductions planned for September and December of that year.
The revised forecast is a significant shift from Citi's earlier outlook, which predicted three rate cuts clustered between October 2026 and January 2027. The change reflects the Fed's more hawkish stance on interest rates in light of the strong labor market data.