Citi Shifts Fed Rate Cut Forecast To April After Strong U.S. Jobs Report

A stronger-than-expected U.S. jobs report has lowered expectations for an imminent Fed rate cut, influencing market outlooks across the financial world and crypto markets as well. Investors are recalibrating expectations for monetary easing after fresh labor-market data suggested resilience.

Citi Delays Fed Rate Cut to April After Strong Jobs Data

Citigroup has also updated its forecast for the next Fed rate cut, moving it to April 2026 from March. The bank cited strong employment data and uncertainty over future Federal Reserve leadership when making the adjustment.

As CoinGape reported, January labor data exceeded forecasts. January Nonfarm Payrolls rose to 130,000, twice the 65,000 that were expected. The jobless rate fell to 4.3%, from 4.4%. The figures indicated that hiring conditions were improving, following signs of a cool-down last year. 

The report adds to the evidence that the labor market has stabilized after weakening in mid-2025, said Citi analysts led by Veronica Clark. They pointed out that the decline in unemployment came even as participation rose, which they said was a positive sign.

“All around stronger details of the January employment report will be further evidence to Fed officials that the labor market has stabilized after a weaker period in mid-2025,” Clark wrote in a research note. She added that there may not be enough additional labor data before the March FOMC meeting to justify another rate reduction.

Citi has also argued that the January report doesn’t alter its broader take. The bank anticipates a gradual easing in labor conditions and a small increase in unemployment by 2026. Clark cautioned that the risks are still skewed toward a bigger spike if layoffs start to mount.

Notably, Polymarket traders predict a 92% probability that rates will be held steady at the March meeting. The chances of a 25-basis-point cut are 8%. 

How June Cut Outlook and Warsh Shift Impact Crypto

A Reuters poll from Feb. 5-10 reflects similar sentiments. About 75 of the 101 economists predict no rate change at the next meeting. Almost 60% of those surveyed expect rates to reach a range of 3.25%–3.50% by the end of next quarter, and June is seen as the most likely beginning date.

The leadership transition at the central bank raises uncertainty. President Trump has nominated Kevin Warsh to replace Jerome Powell. Over 70% of economists polled said they were worried about Federal Reserve independence being eroded after Powell’s tenure. Respondents were mixed on whether Warsh’s nomination changes the outlook for policy.

Warsh’s previous speeches were seen as supporting tighter monetary conditions. Lately, such recent statements invoking productivity gains from AI have been construed in a less prohibitive sense. Economists said they will take a fresh look after confirmation hearings offer more clarity on policy.

Economic projections show moderation. Growth in the United States cooled to 2.9% during the final three months of 2025, down from 4.4 %in the previous quarter. Growth in 2026 is expected to be between 2% and 2.4%. Inflation is expected to stay above the 2% target this year.

Bitcoin was trading below $66,000 shortly before the jobs report. It briefly leapt above $67,000 after the data release before settling at that level.