Citigroup: Inflation slows, Fed rate cuts may exceed current expectations
ChainCatcher reported that the Federal Reserve raised its federal funds rate target by 0.5 percentage points by the end of 2025. Citigroup economist Andrew Hollenhorst believes the Federal Reserve may find itself in a state of confusion. Due to a 0.1% month-on-month increase in core PCE in November, the slowdown in price increases, the Federal Reserve's eventual rate cut may exceed current expectations. "In our baseline assumption, a softening labor market will lead the Federal Reserve to cut rates at each subsequent meeting." This view differs from the market's expectation that the Federal Reserve will pause rate cuts in January. "But even if we're wrong, a flat unemployment rate and slowing inflation would be enough reason to cut rates at least at every meeting beyond January."
