Citi Adjusts Fed Forecast After Disappointing July Jobs Report
Citi economists have revised their forecast for the Federal Reserve's monetary policy following the release of the July jobs report, which showed slower growth in employment than expected. They now predict 50 basis point rate cuts in September and November, with further cuts in subsequent meetings to reach a terminal rate of 3-3.25% by mid-2025.
The U.S. economy added 114,000 jobs in July, falling short of the anticipated 175,000 jobs. Citi's analysis suggests that the labor market may be weakening further, leading to the possibility of larger rate cuts by the Fed. Other major Wall Street research firms, like Evercore ISI, are also adjusting their Fed forecast models, with calls for at least three rate cuts in 2024.
Following the recent data, Evercore ISI believes the Fed will cut rates at least three times in 2024, with a 50 basis point cut in September as a realistic possibility. Major U.S. indices reacted sharply to the news, with both the [insert indices names] down by more than 2%.
In conclusion, the disappointing job growth in July has raised concerns about the strength of the labor market and prompted expectations of more aggressive rate cuts by the Federal Reserve. Investors should pay attention to these developments as they can impact financial markets and investment strategies.
