Citigroup has delayed its Fed rate cut timeline to September, citing firm U.S. job growth and inflation risks. This change comes as traders continue reducing expectations for near-term easing ahead of the Federal Reserve’s April meeting. The bank now expects cuts later in 2026 after earlier forecasts pointed to mid-year action.
Citigroup Sees No Fed Rate Cut Before September As Odds Decline
According to a Reuters report, Citigroup reset its Fed rate cut expectations after stronger-than-expected March job data and persistent inflation concerns. The bank now projects 75 basis points of cuts spread across September, October, and December. Previously, it had expected easing to begin in June, followed by July and September.
March hiring exceeded forecasts, supported by the end of a healthcare workers’ strike and warmer weather conditions. However, Citi flagged rising risks tied to the ongoing U.S.-Iran war, which could weaken labor market conditions. It added that softer hiring trends may emerge in the coming months, pushing unemployment higher during summer.
This is a change in timing rather than total easing expected this year. Citi maintained that labor market weakness remains the trigger for policy adjustments. It emphasized that incoming data will likely delay the start of cuts. Citigroup said,
We continue to think signs of a weakening labor market will result in cuts later in the year. But the timing of upcoming data suggests a later start to rate cuts than we had previously been expecting.
Polymarket Data Shows Declining Odds of Rate Cut
Meanwhile, there is reduced confidence in near-term Fed rate cut decisions. As per Polymarket data, traders expect a 1% chance of a cut at the April meeting. Expectations rise slightly to 10% in June and 22% in July.
Source: Polymarket
However, probabilities increase later in the year. Citi’s September prediction shows a 47% chance of a cut, followed by 55% in October. By December, the likelihood climbs to 63%, aligning more closely with Citi’s revised outlook.
In addition, Federal Reserve data pointed to slowing labor force growth. This hawkish outlook comes after Citi cut its 12-month Ethereum and Bitcoin targets due to CLARITY Act delays.
Wells Fargo Expects No 2026 Cuts
Additionally, Wells Fargo Investment Institute said it no longer expects any Fed rate cut in 2026. The institute cited inflation uncertainty and geopolitical risks linked to the Middle East conflict. It had previously forecast two cuts this year before revising its outlook. Wells Fargo strategists said,
Against the backdrop of a noticeable but likely transient inflation bump and elevated uncertainty, we believe that the balance of risks has shifted to incentivize patience from the Fed.
The market expects the cuts to hold steady in the next meeting. The benchmark rate is expected to remain at 3.50% to 3.75%. As Coingape reported, Kevin Warsh’s Fed chair nomination hearing is set for April 16. A positive outcome could raise the expectations for subsequent Fed rate cuts.
Source: Polymarket
Fed Chair Jerome Powell is expected to maintain a cautious tone during the meeting. Officials may emphasize data dependence as strong job growth and inflation continue to shape policy direction.
