Citi on FOMC - FJElite

01 Oct 2026 16:48Commentary Elite US Bonds US Indexes USD
  • The Federal Reserve's move could be to cut rates, despite markets widely expecting another hike, according to Scott Chronert, head of U.S. equity strategy at Citi Research.
  • Chronert anticipates the Fed could be in a holding pattern until mid 2027 when it can then lower borrowing costs. But fed funds futures suggest a roughly 85% likelihood that the Fed will increase rates again at its meeting in December, according to CME's FedWatch tool.
  • Citi economists believe "we've got the September hike and they're probably in pause mode 'til middle of next year," Chronert said Thursday on CNBC's "Squawk on the Street."
  • The Fed hiked rates by 25 basis points in September, marking its first increase to borrowing costs in three years. The central bank signaled that another hike could be in the cards.
  • Following the Fed's hike, Chronert said inflation could begin to pullback and the labor market could feel more intense pressure.
  • To be sure, Chronert acknowledged that the September rate hike alone wouldn't "do much" to establish a narrative that the Fed is focused on bringing down inflation. Because of that, he said one or two additional increases could be useful for assuring traders that the central bank is stable. "I can take another Fed rate hike and probably spin that as a positive," Chronert said.