The shift in outlook marks a sharp pivot for Citigroup, which previously anticipated three rate reductions between October 2026 and January 2027. Instead, economists Andrew Hollenhorst and Veronica Clark now project a series of cuts beginning in mid-2027, driven by US employers adding 162,000 jobs in August—more than triple the 53,000 predicted by analysts. With the unemployment rate holding steady at 4.1% and labor force participation rising, the Federal Reserve faces little pressure to lower borrowing costs.
This hawkish trajectory has created a complex environment for Bitcoin. While initial reports of the strong labor data triggered a sell-off that pushed Bitcoin below $80,000, the asset has since demonstrated unexpected resilience. Despite the Fed raising the benchmark rate to a 3.75% to 4% range in September, Bitcoin recovered to climb above $86,000. Analysts attribute this rebound to a confluence of factors, including steady demand for spot ETFs, falling Treasury yields, and a surge in short covering that effectively neutralized the immediate impact of the central bank's policy shift.

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