Citibank: The Federal Reserve is expected to keep interest rates unchanged in October and December and resume interest rate cuts in June 2027

The Zhitong Finance App learned that Citi released a research report saying that the Federal Reserve raised interest rates by 25 basis points. It is expected that the month-on-month increase in core inflation will be moderate in the next few months, which is surprising to Fed officials, nor is it expected that economic growth will accelerate significantly. It is expected that the Federal Reserve will keep interest rates unchanged in October.

The bank said that unlike Chairman Walsh's description of the labor market, recent recruitment growth has been moderate and the unemployment rate has remained low, just because the labor participation rate has declined rapidly, which does not mean that demand for labor is accelerating. The bank expects the Federal Reserve to wait for more data after October to assess the impact of the 25 basis point increase in policy interest rates, then stay on hold again in December. At that time, a series of more moderate inflation data should provide sufficient evidence that inflation is slowing down to support the Federal Reserve to keep interest rates unchanged again.

As inflation continues to cool down, Citi expects the Federal Reserve to resume cutting interest rates in June 2027.