The shift in outlook marks a sharp pivot for Citigroup, which previously anticipated three rate reductions between October 2026 and January 2027. Instead, economists Andrew Hollenhorst and Veronica Clark now project a series of cuts beginning in mid-2027, driven by US employers adding 162,000 jobs in August—more than triple the 53,000 predicted by analysts. With the unemployment rate holding steady at 4.1% and labor force participation rising, the Federal Reserve faces little pressure to lower borrowing costs.
In section Cryptocurrency
Citigroup Delays Fed Rate Cuts to 2027 as Labor Market Stays Hot
Citigroup has pushed its expectations for the first Federal Reserve interest rate cut to June 2027, citing a robust labor market that shows few signs of cooling. The revised forecast follows August payroll data that significantly outperformed expectations, forcing a reassessment of the central bank’s path toward monetary easing.
This hawkish trajectory has created a complex environment for Bitcoin. While initial reports of the strong labor data triggered a sell-off that pushed Bitcoin below $80,000, the asset has since demonstrated unexpected resilience. Despite the Fed raising the benchmark rate to a 3.75% to 4% range in September, Bitcoin recovered to climb above $86,000. Analysts attribute this rebound to a confluence of factors, including steady demand for spot ETFs, falling Treasury yields, and a surge in short covering that effectively neutralized the immediate impact of the central bank's policy shift.
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