Citi sticks to Fed rate cuts in 2026 after strong US jobs data
Citi economists, led by Andrew Hollenhorst, are keeping their call for Fed rate cuts in 2026 despite May’s blowout US jobs report. While many major banks scaled back easing bets after nonfarm payrolls surprised to the upside, Citi expects three 25-basis-point Fed rate cuts in 2026, scheduled for September, October and December.
The trigger was the May employment report (June 5): the US added 172,000 nonfarm payrolls, above Bloomberg’s economist estimates, while the unemployment rate stayed at 4.3%. Hollenhorst argues the Fed will likely focus on inflation risks at the June 16–17 meeting, so strong payrolls may reinforce a wait-and-see stance near term.
Crucially for traders, Citi’s path implies Fed rate cuts starting in September. That would shift the monetary backdrop toward easier policy: the article notes a cumulative 75-basis-point reduction over four months could improve risk appetite, including in crypto. Bitcoin fell about 0.8% immediately after the May jobs data, reflecting how the market is pricing a more hawkish Fed.
The next catalyst is the June 16–17 Fed meeting. If officials or Chair Powell signal openness to Fed rate cuts later this year, digital-asset markets could react quickly. In the meantime, the market will watch the next two to three months of employment data to confirm or invalidate Citi’s contrarian view.
Neutral
The article centers on Citi’s contrarian stance: three Fed rate cuts in 2026 (Sep/Oct/Dec) despite a May jobs surprise. That setup is not automatically bullish for crypto because the market is currently reacting to stronger labor data with higher yields and a stronger dollar—conditions that recently coincided with BTC weakness.
At the same time, if upcoming employment prints soften and the June 16–17 Fed messaging shifts toward easing openness, the “policy pivot” narrative could re-enter quickly, which historically tends to support higher-risk assets. In the short term, traders may stay reactive to each jobs release and treat the Fed meeting as the main volatility trigger. In the long run, the direction of the labor market (softening vs. staying hot) will determine whether Citi’s 2026 Fed rate cuts path becomes credible or gets buried by further hawkish repricing.
Overall, because the timing (September) is forward-looking and the near-term path depends on data and Fed communication, the expected market impact is more balanced than one-sided.