Citigroup Updates U.S. Rate Cut Forecast Amid Economic Shifts
Citigroup has revised its U.S. rate cut forecast, delaying it to September with three cuts instead of four, following a stronger May jobs report. The brokerage now expects 75 basis points of cuts in 2023. It also projects two rate cuts in early 2026 and has raised its S&P 500 year-end target.
Citigroup has adjusted its timetable for U.S. rate cuts, now anticipating the first reduction to occur in September, rather than the previously expected July. This revision, prompted by a surprisingly robust jobs report in May, indicates three cuts in 2023, each of 25 basis points.
The Wall Street firm originally forecasted a total of 100 basis points of cuts but has now scaled back its expectations to 75 basis points, spread evenly over September, October, and December. Looking further ahead, Citigroup predicts two additional cuts in 2026, also of 25 basis points each, in January and March.
Meanwhile, data revealed that U.S. non-farm payrolls rose by 139,000 in May, surpassing estimates. Reflecting the changing economic landscape, Citigroup has also increased its year-end target for the S&P 500, buoyed by confidence in corporate earnings and growth in artificial intelligence.
(With inputs from agencies.)
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