Citi now expects the Fed to cut 125bps by the end of year
Citi adjusted its forecast for the Federal Reserve's monetary policy following the release of the July jobs report, which indicated a slower-than-expected growth in employment.
The U.S. economy added 114,000 jobs in July, falling short of the anticipated 175,000 jobs and Citi's own estimate of 150,000. The increase in private employment accounted for 97,000 jobs, with government employment contributing an additional 17,000 positions. The current policy rates, considered to be in restrictive territory, along with Fed officials' growing attention to employment, support Citi's revised expectations.
"Following this report we think the Fed will cut at least three times in 2024 – September, November and December – in a more front-loaded effort to secure the soft landing. Further we think there is now a realistic possibility that the first move will be a 50bp cut in September," they said.
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