Citi Pushes Back Fed Rate-Cut Call to June 2027 on Jobs Data

Citi told clients it now expects the Federal Reserve to hold interest rates steady until June 2027, pushing back its previous forecast after the latest jobs data came in stronger than expected. The bank said the labor market's resilience gives the Fed cover to keep rates high for longer even as inflation cools. The call matters because markets had been pricing in cuts much sooner. A later first cut means borrowing costs stay elevated for longer, which raises the bar for stocks trading at high valuations and adds pressure to sectors that rely on cheap credit, such as housing and small-cap companies. What remains unresolved is how much the labor market itself might weaken between now and mid-2027. Other analysts have argued that softening jobs data could still force the Fed's hand earlier than Citi expects.