Citi Stands Alone on Wall Street in Holding the Line on Rate Cuts
0xBroomberg
After May payrolls beat every forecast, Citi's chief U.S. economist is holding his call for three Fed cuts this year — a position now nearly alone on Wall Street, where markets have fully priced in a hike.
Payrolls crushed expectations — so why still call for cuts?
May nonfarm payrolls rose 172,000, topping every estimate in Bloomberg's survey.
Andrew Hollenhorst concedes Fed officials will "focus hawkishly on upside inflation risk" at the June 16–17 meeting, but he expects the labor market to soften over the next three months.
This means → Citi is not betting on this print. It is betting future data will weaken — a trend call, not a snapshot call.
What does Citi's rate path actually look like?
Citi forecasts 25 bp cuts at each of the last three meetings: September, October, and December.
The call dates back to last December, though the expected start has been pushed from January all the way to September.
In plain terms = Citi hasn't changed the destination — just kept moving the starting line back.
Where does the rest of Wall Street stand?
Most major banks entered 2026 forecasting two cuts, but after the Iran war drove oil prices and inflation higher, nearly all abandoned the cutting thesis.
JPMorgan has penciled in a 2027 hike since January; BNP Paribas now forecasts three consecutive hikes starting December.
This means → Citi is no longer just a minority voice — it is the only major bank still calling for cuts.
What is the market pricing in?
After the payrolls print, traders have fully priced a 25 bp hike this year.
December hike probability stands at roughly 63%; October at about 60%.
This reflects a market that is pointing in the exact opposite direction from Citi — one is pricing hikes, the other is forecasting cuts.
What comes next to settle the debate?
The nearest checkpoint is May CPI data on June 11, followed by subsequent jobs reports.
Citi was one of the most accurate Fed forecasters last year — it called three cuts when most rivals expected a hold, and Citi was right.
In plain terms = Citi has a precedent for being the lone voice that turns out correct, but the stakes are higher this time — if the labor market doesn't soften, the call collapses.
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