Rate Cut Delayed as Strong Jobs Data Tests Bitcoin's Resilience
Citigroup has pushed back its forecast for the first interest rate cut by the Federal Reserve to June 2027, citing strong US jobs data. The bank previously predicted cuts in October and December 2026 and January 2027, but now projects reductions in June, September, and December 2027.
The August payrolls report showed a gain of 162,000 jobs, more than triple the expected 53,000, and maintained an unemployment rate of 4.1%. The strong labor market has led Citi economists to conclude that employment conditions are stable enough for the Fed to shift its attention to inflation.
The revised forecast has sparked a market reaction, with rate futures increasing the probability of a September Fed hike from 52% to 61%, causing Bitcoin to fall within hours. However, the price rebounded after the September 16 Fed decision to raise interest rates by 25 basis points to a 3.75%-4% target range.
The Federal Reserve's decision has raised questions about how long a resilient labor market can keep real yields and interest rates elevated before breaking risk-asset demand. The sensitivity of Bitcoin to macro surprises is evident in its price path around these events, with the asset falling below $80,000 after the August jobs release and later quoted near $79,600.