Citigroup traders bet that the Federal Reserve will make three aggressive rate cuts of 50 basis points each

Citigroup traders are betting that the Federal Reserve will cut interest rates by 50 basis points three times this year, a wager that exceeds market and bank economist expectations. Citigroup's short-term interest rate trading department said that if the Fed sees weakness in the labor market, it would actively ease policy. Currently, swap trades suggest about a one-third chance of a 50-basis-point cut this month. Akshay Singal, global head of short-term interest rate trading at Citigroup said: "The Fed won't take small steps quickly. They showed no hesitation when raising rates in 2022 and they won't hesitate to lower them either. If today's employment data is disappointing, the Fed is likely to cut rates by 50 basis points not only in September but also in November and December." "Powell made it clear at Jackson Hole that the focus of the Federal Reserve will be on the labor market."