Citigroup Lowers Interest Rate Cut Expectations
(Reuters) – Citigroup has reduced its forecast for an interest-rate cut at the U.S. Federal Reserve's December meeting, now predicting a 25-basis-point reduction following robust nonfarm payrolls data. Brokerages like Morgan Stanley and Goldman Sachs also reiterated their expectation of the same cut after the jobs data.
Nonfarm Payrolls Data
Data revealed that nonfarm payrolls increased by 227,000 jobs last month, following an upwardly revised 36,000 rise in October. Economists polled by Reuters had anticipated a 200,000 increase, post a previously reported gain of 12,000 jobs in October.
U.S. job growth surged in November, recovering from constraints caused by hurricanes and strikes. However, a rise in the unemployment rate to 4.2% indicates an easing labor market, likely prompting the Fed to cut interest rates again this month.
The Fed's upcoming monetary policy meeting is scheduled for December 17-18.
Rate-Cut Estimates from Major Brokerages Following NFP Data
| Brokerages | December 2024 (bps) |
|---|---|
| Morgan Stanley | 25 |
| Macquarie | 25 |
| ING | 25 |
| Wells Fargo | 25 |
| BofA Global | 25 |
| Barclays | 25 |
| Goldman Sachs | 25 |
| UBS Global | 25 |
| Societe Generale | 25 |
| Nomura | – |
| Citigroup | 25 |
| J.P. Morgan | 25 |
Rate-Cut Estimates from Major Brokerages Prior to NFP Data
| Brokerages | December 2024 (bps) | 2025 Fed Funds Rate |
|---|---|---|
| BofA Global | 25 | 50 | 3.75%-4.00% (end of June) |
| Barclays | 25 | 50 | 3.75%-4.00% (end of 2025) |
| Macquarie | 25 | 100 | 3.25%-3.50% (through June 2025) |
| Goldman Sachs | 25 | 100 | 3.25%-3.50% (through September 2025) |
| J.P. Morgan | 25 | 75 | 3.75% (through September 2025) |
| UBS Global | 25 | 125 | 3.00%-3.25% (through end of 2025) |
| TD Securities | 25 | 100 | 3.25%-3.50% (through end of 2025) |
| Morgan Stanley | 25 | 100 | 3.375% (Q4 2025, through June 2025) |
| Jefferies | 25 | 100 | 3.25%-3.50% (through end of 2025) |
| Nomura | – | 50 | 4.125% (through end of 2025) |
| UBS Global Wealth | 25 | 100 | 3.25%-3.50% (through end of 2025) |
| Deutsche Bank | 25 | No Rate Cuts | 4.375% |
| Citigroup | 50 | – | – |
- UBS Global Research and UBS Global Wealth Management are distinct, independent divisions in UBS Group.
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