Citigroup Delays Fed Rate Cuts Amid Strong U.S. Jobs Data
Citigroup has revised its outlook on Federal Reserve policy, pushing back the expected timeline for interest rate cuts. The decision comes after stronger-than-expected U.S. employment data and ongoing concerns about persistent inflation.
New Timeline for Fed Rate Cuts
According to a note dated April 3, the Wall Street bank now forecasts a total of 75 basis points in rate cuts to take place later in the year—specifically in September, October, and December. This marks a shift from its earlier expectation of cuts beginning in June, July, and September.
Strong Labor Market Delays Policy Shift
Citigroup stated that while signs of labor market weakness are still expected, the latest economic data suggests that the Federal Reserve may delay easing monetary policy longer than previously anticipated.
Job Growth Surprises to the Upside
U.S. employment growth rebounded in March, exceeding forecasts. The improvement was partly driven by the end of healthcare sector strikes and more favorable weather conditions. However, despite the strong headline numbers, underlying risks remain.
Rising Risks from Geopolitical Tensions
Citigroup highlighted that ongoing geopolitical uncertainty, particularly the prolonged conflict involving Iran, could weigh on future labor market performance. The lack of a clear resolution raises concerns about broader economic stability.
Unemployment Expected to Rise Later in the Year
Looking ahead, the bank expects hiring activity to weaken in the coming months, which could lead to a gradual increase in the unemployment rate during the summer—following a pattern observed in recent years.
