Citigroup Stays Firm on October Rate Cut: Fed's Next Move Is Easing, Not Tightening

As the Federal Reserve shifts to a hawkish stance and most Wall Street banks abandon their rate-cut expectations, Citigroup stands as a lone holdout, maintaining that the Fed's next move will be easing rather than tightening. In its base-case scenario, Citigroup expects the Fed to restart rate cuts in October 2026 with a 25-basis-point reduction, followed by additional 25-bp cuts in December 2026 and January 2027, totaling 75 basis points of easing. This projection contrasts sharply with the prevailing market consensus, which has largely pivoted toward a more cautious outlook following recent hawkish signals from Fed officials. Citigroup's unchanged forecast reflects its view that the U.S. economy will require further monetary stimulus to mitigate downside risks, even as other institutions have adjusted their timelines.