Background on Citigroup and its Relevance
Citigroup, a prominent Wall Street investment banking and financial services corporation, plays a crucial role in the global economy. With operations spanning across more than 160 countries, Citigroup provides a wide range of services including corporate and investment banking, treasury and trade solutions, and wealth management. Given its extensive reach and influence, Citigroup’s economic predictions and financial analyses are closely monitored by investors, policymakers, and the general public.
Citigroup’s Updated Interest Rate Cut Predictions
Citigroup has postponed its forecast for interest rate cuts in the United States from July to September. Instead of anticipating four rate reductions this year, Citigroup now expects only three. This adjustment comes after a stronger-than-expected May jobs report in an otherwise cooling labor market.
Revised Interest Rate Cut Projections
Citigroup now predicts 75 basis points (bp) of interest rate cuts throughout the year, divided into three equal installments in September, October, and December. This is a downward adjustment from their previous forecast of 100 bp.
Furthermore, Citigroup has projected two additional 25 bp interest rate cuts in January and March of 2026.
Recent Fed Actions
The Federal Reserve’s (Fed) most recent interest rate cut occurred in December 2024, when they lowered the key lending rate by 25 bp.
May Jobs Report and Market Expectations
In the latest jobs report, non-farm payrolls in the United States increased by 139,000 positions last month, following a downwardly revised 147,000 job growth in April. Economists surveyed by Reuters had estimated a 130,000 job addition for the May non-farm payrolls.
Market participants anticipate that the U.S. central bank will keep interest rates unchanged during their upcoming meeting, while simultaneously pricing in two 25 bp rate cuts for the remainder of the year.
Key Questions and Answers
- What is Citigroup’s updated interest rate cut prediction for 2025? Citigroup now expects three 75 bp interest rate cuts, divided into September, October, and December reductions. They previously forecasted four 100 bp cuts.
- What recent action has the Federal Reserve taken regarding interest rates? The Fed’s most recent interest rate cut occurred in December 2024, when they reduced the key lending rate by 25 bp.
- How did the May jobs report impact Citigroup’s revised predictions? A stronger-than-expected May jobs report led Citigroup to adjust their interest rate cut forecast from four to three this year.
- What are market expectations for the U.S. central bank’s interest rates in the near future? Market participants expect the Fed to maintain current interest rates at their upcoming meeting, while also anticipating two 25 bp rate cuts for the rest of 2025.
