Citigroup Delays Fed Rate-Cut Forecast to September After Strong Jobs Data

Citigroup shifted its Federal Reserve rate-cut forecast by roughly three months, abandoning its expectation for a June move and penciling in three quarter-point reductions in September, October, and December instead. The revision keeps the Fed's easing cycle on hold through the heart of summer, and for millions of borrowers, it means the wait for lower rates just got longer.

The change, contained in a research note dated April 3, came in direct response to Friday's March jobs report. Nonfarm payrolls rebounded by 178,000 and the unemployment rate held steady at 4.3%, a combination strong enough to undercut Citigroup's earlier case for easing beginning in June. "We continue to think signs of a weakening labor market will result in cuts later in the year. But the timing of upcoming data suggests a later start to rate cuts than we had previously been expecting," Citigroup's analysts wrote.

The practical impact runs directly to household budgets. The 30-year fixed mortgage rate averaged 6.46% for the week ending April 2, according to Freddie Mac, ticking up from 6.38% the prior week. With Citigroup's new baseline pointing to September as the earliest possible relief, prospective homebuyers and owners eyeing refinances face at least five more months of rates in the mid-to-upper 6% range. Average new-car loan rates stood at 6.37% as of the third quarter of 2025, according to Experian, and those benchmarks track Fed decisions with a lag. Variable-rate credit card holders, whose APRs reset in lockstep with the prime rate, will similarly wait longer for payment relief. The one group that benefits from the delay: savers holding high-yield accounts and money market funds, who continue earning elevated yields while the Fed holds its position.

Citigroup's call occupies a middle ground among Wall Street institutions. J.P. Morgan Research went considerably further in its conservatism, concluding after strong December 2025 labor data that it no longer expected any cuts this year and continuing to expect the Fed to remain on hold. A broader tracking of six major institutional forecasters found that four now expect exactly one 25-basis-point cut by year-end, with September and November as the most commonly cited meeting dates, a consensus that lines up closely with Citigroup's revised timeline.

The Federal Reserve has held its benchmark rate steady at 3.50 to 3.75% since its March 2026 meeting, following a series of 25-basis-point cuts that began in late 2024. CME FedWatch data puts the probability of a September cut at around 48%, a near-coin-flip reading that reflects how much depends on inflation data still to come. The two metrics most likely to force a further delay are core personal consumption expenditures, the Fed's preferred inflation gauge that remains above its 2% target, and average hourly earnings growth, which feeds directly into stubborn service-sector price pressures. Any upside surprise in either before the July Federal Open Market Committee meeting could push Citigroup's September baseline further out.

The central bank faces a familiar bind: a labor market resilient enough to signal economic health is simultaneously the strongest argument against easing. Citigroup's analysts acknowledged the tension explicitly, noting that labor market deterioration remains the precondition for their rate-cut call. Until that deterioration arrives in the data, 75 basis points of relief stays parked on the second half of the calendar, and subject to revision.