Citigroup Delays Rate-Cut Plans Amid Surging Job Gains

Citigroup has revised its Fed rate-cut timeline due to robust U.S. job growth and persistent inflation risks, now expecting cuts in late 2023 instead of mid-year. The change comes as job gains exceeded expectations, but downside risks from geopolitical tensions remain.

Citigroup has adjusted its expectations for Federal Reserve rate cuts, now projecting them to occur in September, October, and December, instead of earlier in the year. This shift is attributed to stronger than anticipated U.S. job gains and ongoing inflation concerns.

The company notes that while a softening labor market is still anticipated to lead to cuts, recent data suggests these may happen later than initially forecast. March job growth outperformed predictions, aided by the end of a healthcare workers' strike and improved weather conditions, despite looming risks from international conflicts.

Citigroup foresees potential for increased unemployment over the summer, consistent with patterns observed in recent years.

(With inputs from agencies.)