Citi: Expects the Fed to keep rates unchanged in October and December, and resume rate cuts in June 2027

BlockBeats news, September 17: Citigroup said in a research report that the Federal Reserve raised interest rates by 25 basis points, and it expects the month-over-month increase in core inflation to be relatively moderate in the coming months, which would surprise Fed officials. It also does not expect economic growth to accelerate significantly, and expects the Fed to keep rates unchanged in October. Unlike Chair Warsh's description of the labor market, the recent moderate hiring growth and the low unemployment rate are only due to a rapid decline in the labor force participation rate, and do not mean that labor demand is accelerating.

The bank expects the Fed to wait for more data after October to assess the impact of the 25 basis point policy rate hike, and then to stay put again in December, when a series of milder inflation readings should provide sufficient evidence that inflation is slowing, supporting the Fed in keeping rates unchanged again. As inflation continues to cool, Citigroup expects the Fed to resume rate cuts in June 2027.