Citigroup Delays Fed Rate Cut Forecast Amid Strong Jobs Data and Inflation Concerns

Citigroup has revised its Federal Reserve rate cut timeline, pushing back expectations following stronger-than-anticipated U.S. job growth and lingering inflation pressures. The Wall Street giant now anticipates 75 basis points in rate reductions spread across September, October, and December — a notable shift from its earlier projection of cuts in June, July, and September.

The revision came through an analyst note dated April 3, where Citigroup explained that incoming economic data pointed to a later start than previously modeled. "We continue to think signs of a weakening labor market will result in cuts later in the year. But the timing of upcoming data suggests a later start to rate cuts than we had previously been expecting," the bank stated.

March's U.S. labor market data came in well above forecasts, bolstered by the resolution of a healthcare worker strike and favorable weather conditions that accelerated seasonal hiring. Despite this short-term strength, broader risks are beginning to surface. An ongoing conflict with Iran continues to cast uncertainty over the economic outlook, with no clear resolution in sight — a factor that could gradually weigh on business confidence and workforce demand.

Citigroup believes these mounting pressures will eventually translate into softer hiring activity, pushing the unemployment rate higher during the summer months — a pattern consistent with trends observed over the past several years. Once that labor market cooling becomes evident in the data, the Fed is expected to respond with the anticipated rate cuts.

For investors and market participants, this forecast shift underscores the importance of monitoring upcoming employment reports and inflation indicators. The Federal Reserve's path forward remains highly data-dependent, and any significant deviation in key economic metrics could prompt further revisions to Wall Street's rate cut expectations before year-end.