Citigroup sees Fed’s first rate cut in June

(Reuters) -Citigroup pushed forward its forecast of the U.S. Federal Reserve’s 25 basis-point interest rate cut to June from July, citing the central bank’s dovish stance, falling inflation, and rising pressures from geopolitical risks.

The brokerage said on Wednesday it expects 125 bps of total rate cuts in 2024, compared to its earlier forecast of 100 bps, which would take the policy rate to 4.25%.

Fed Governor Christopher Waller said on Tuesday the United States is “within striking distance” of the Fed’s 2% inflation goal.

The Fed’s dovish stance follows a softer core inflation report that boosted investor bets of early interest rate cuts, while escalating tensions in the Middle East added more uncertainty to the global economy.

“(The) underlying situation in the Middle East remains highly uncertain, and the possibility of more severe or sustained pressures on shipping routes and transport costs—or potentially on oil prices—remains very much in play,” Citigroup said in a note.

(Reporting by Reshma Rockie George in Bengaluru; Editing by Shinjini Ganguli)