Citi delays Fed rate-cut forecast to 2027 after strong jobs data

Citigroup has postponed its forecast for the Federal Reserve’s next interest-rate cut to June 2027, replacing its earlier projection for cuts beginning in October 2026 with three quarter-point reductions in June, September and December 2027. The revised outlook followed an unexpectedly strong August jobs report showing 162,000 payroll gains, an unemployment rate holding at 4.1%, increased labor-force participation and upward revisions to earlier employment figures. Citi economists said the data suggest labor-market conditions are broadly stable, allowing Fed officials to focus more closely on persistent inflation rather than employment risks. Financial markets consequently raised the implied probability of a rate hike at the Fed’s September meeting, while investors await upcoming inflation data for further clues. Citi remains relatively dovish compared with some rivals, which anticipate an extended period of elevated rates or still see a possibility of additional hikes.