Citigroup: 6% Odds on April Rate Hike Despite Fed Forecasting Cuts
Federal-funds futures show a 6% probability of an April rate increase, the first time odds exceeded cut bets since December 2023. Citigroup economists highlight that oil-driven inflation risks are likely temporary, matching Fed projections that foresee no rate hikes this year and only one in 2027.
1. Investors Assign 6% Chance to April Rate Hike
Federal funds futures rose to imply a 6% likelihood of a rate increase at the Fed’s April meeting, marking the first shift toward a hike since December 2023. This change reflects uncertainty from surging oil prices, though Citigroup economists argue the shock is more likely to damp growth and employment than fuel persistent inflation.
2. Fed Policy Path Reflects Cut Bias
In updated economic projections, none of the Fed’s 19 policymakers expect a rate increase in 2026 and only one forecasts a hike in 2027, with most signaling another cut. The Fed chair noted that while a rate increase was discussed, the vast majority of the FOMC view reductions, not hikes, as their base case.