The Federal Reserve's hawkish signals strengthen, and Citigroup pushes back the interest rate cut timetable by one month

BlockBeats News, June 18 — After the Federal Reserve announced its latest interest rate decision, Citigroup adjusted its forecast for the Fed's policy path, pushing the timing of rate cuts back by one month overall. Citigroup's latest estimate is that the Fed may cut rates once in October and December 2026, and continue cutting in January 2027. Previously, Citigroup's baseline scenario was that the Fed would start cutting rates in September 2026, with consecutive cuts in September, October, and December.

It is reported that the Federal Reserve launched a policy review after the appointment of new Chair Kevin Warsh, while deciding to keep the benchmark interest rate unchanged. Against the backdrop of persistent inflationary pressures, nearly half of policymakers currently expect the possibility of rate hikes this year. Citigroup stated in its report that, although Warsh did not explicitly mention it, he is very likely to agree with the bank's view that if officials had more time to digest the recent sharp decline in oil prices, many of the forecast points in the dot plot would be lower.

LSEG data shows that traders have now largely priced in the possibility of a 25 basis point rate hike by the Fed before October. Citigroup believes that from June to August, core CPI may continue to weaken, and the labor market will also continue to cool down, but even if data improves, it may take longer for policymakers to reach a consensus on starting rate cuts.