Citi: Expects the Fed to keep rates unchanged in October and December, and resume rate cuts in June 2027.

Citi released a research report stating that the Fed raised rates by 25 basis points, and expects core inflation to rise at a relatively modest month-on-month pace in the coming months, which will surprise Fed officials. It also does not expect economic growth to accelerate significantly, and anticipates that the Fed will keep rates unchanged in October. The bank said that, contrary to Chair Warsh's description of the labor market, the recent moderate growth in hiring and the low unemployment rate are merely due to a rapid decline in the labor force participation rate, and do not mean that labor demand is accelerating. The bank expects the Fed to wait for more data after October to assess the impact of the 25-basis-point policy rate hike, and then hold steady again in December, when a series of milder inflation readings should provide sufficient evidence that inflation is slowing, supporting the Fed in keeping rates unchanged once again. As inflation continues to cool, Citi expects the Fed to resume rate cuts in June 2027.