Citigroup revises US interest rate outlook following strong September inflation

Citigroup now expects the US Federal Reserve to raise interest rates by 25 basis points in December. This shift comes after September inflation data came in higher than expected. The brokerage forecasts that interest rates will stay unchanged after this expected hike. Rate cuts are also unlikely to happen before June 2027.

Context

Rising inflation often forces central banks to increase interest rates to cool down the economy. When price pressures stay high, financial institutions update their forecasts for monetary policy moves.