BlockBeats News, June 18th - Citigroup adjusted its forecast for the Fed's policy path after the Fed announced its latest interest rate decision, delaying the rate cut timeline by one month overall. Citigroup's latest projection suggests that the Fed may cut rates once each in October and December 2026, followed by another cut in January 2027. Previously, Citigroup's base case scenario was for the Fed to start cutting rates in September 2026, with consecutive cuts in September, October, and December.

Reports indicate that the Fed initiated a policy review after the appointment of the new Chair, Kevin Warsh, and decided to keep the benchmark interest rate unchanged. Against the backdrop of persistent inflationary pressures, nearly half of the policymakers currently see the possibility of a rate hike this year. Citigroup stated in its report that although Warsh did not explicitly mention it, he is likely to agree with the view that if officials had more time to digest the recent sharp drop in oil prices, many of the dots in the dot plot would have been lower.

LSEG data shows that traders are currently pricing in the possibility of a 25 basis point rate hike by the Fed before October. Citigroup believes that the core CPI may continue to weaken from June to August, and the labor market will also continue to cool, but even if the data improves, policymakers may still need more time to form a consensus on initiating rate cuts.