Citi changes its view, says the Fed likely to cut by 25 bps next week
Investing.com -- Citigroup analysts have revised their US rate cut forecast following the latest US inflation data, now predicting that the Federal Reserve will cut interest rates by 25 basis points at its upcoming meeting next week.
The analysts noted that core Consumer Price Index inflation rose by 0.281% month-over-month in June, exceeding its expectations. The most surprising component, according to the bank, was the owner's equivalent rent , which increased by 0.50%, the strongest reading since January. " advance in owner’s equivalent rent is probably just enough to convince the FOMC to cut 25bp rather than 50bp at next week’s meeting," wrote the bank.
While the stronger OER data may lead to a more cautious approach to rate cuts, Citi believes that the overall economic picture still supports a rate reduction.
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