Citigroup Updates Fed Rate Forecast Following US Inflation Data
Following September consumer inflation in the US exceeding expectations, Citigroup projected that the Fed will raise interest rates in December.
Following September consumer inflation in the US coming in significantly above market expectations, Citigroup forecasted that the US Federal Reserve will increase its policy rate by 25 basis points in December.
Citigroup's Forecast Revision
In a statement on Wednesday, Citigroup announced that it has updated its projections regarding the Fed's monetary policy following the inflation data that exceeded expectations.
The bank had previously been the sole institution forecasting that the Fed would not make any changes to interest rates for the remainder of the year.
Rate Hike and Cut Expectations
Following the 25 basis point rate hike it expects in December, Citigroup forecasts that the Fed will keep its policy rate steady.
The bank stated that it does not expect interest rate cuts to begin before June 2027.
Course of Inflation and Pricing
Data released in the US revealed that consumer inflation accelerated in September under the influence of rising gasoline prices.
According to CME Group's FedWatch tool, the probability of the Fed raising interest rates at its October meeting increased following the inflation data.