Citigroup delays Fed rate-cut forecast to 2027

Citigroup has significantly revised its interest rate forecast, pushing back expectations for Federal Reserve rate cuts following stronger-than-expected U.S. employment data. The bank now anticipates the next 25-basis-point reduction will occur in June 2027, rather than its previous projections for late 2026 or early 2027.

According to the new forecast, Citigroup expects three separate 25-basis-point cuts to take place in June, September, and December 2027. This shift follows August data showing that non-farm employment increased by 162,000, exceeding market expectations while the unemployment rate remained stable at 4.1%.

Citi economists Andrew Hollenhorst and Veronica Clark noted that the resilient labor market may lead policymakers to shift their focus from employment stability toward the inflation outlook. This revision places Citigroup at odds with some Wall Street views, as market participants monitor upcoming consumer and producer price index data for further signals on the Federal Reserve's monetary policy path.