Citi(US:C) Sou Hu Cai Jing·2025-04-23 02:48Core Viewpoint - The article discusses the growing concerns regarding the U.S. economy, particularly in light of President Trump's criticisms of Federal Reserve Chairman Jerome Powell and his calls for interest rate cuts, suggesting that the U.S. economy is gradually heading towards a downturn [1] Economic Predictions - Citibank has issued a pessimistic forecast, predicting significant economic weakness in the U.S. by June, which may compel the Federal Reserve to initiate its first interest rate cut of the year, potentially leading to as many as five rate cuts [3] - Upcoming reports from S&P Global focusing on the performance of the U.S. service and manufacturing sectors in April will provide critical insights into the economic outlook, especially considering the recent imposition of a 10% tariff on nearly all imports [3] Labor Market and Inflation - Citibank forecasts that the current unemployment rate of 4.2% will continue to rise, with the next unemployment data set to be released in the first week of May, serving as a key indicator of the health of the U.S. labor market [4] - The Federal Reserve faces a challenging situation with inflation slightly above its 2% target, while the tariff policy poses risks of further inflationary pressures amidst economic and labor market recession concerns [4] Monetary Policy Outlook - Citibank's economists believe that the Federal Reserve will prioritize the health of the economy and labor market over strict adherence to inflation targets, suggesting a more dovish stance may emerge as data is released before June [4] - Even with a significant rate cut of 1.25 percentage points, Citibank's economists express skepticism about the ability to fundamentally reverse the economic downturn, predicting the federal funds rate could drop to a range of 3% to 3.25% by the end of 2025 [5] - There is a divergence in expectations between Citibank and Wall Street, with the latter anticipating only three rate cuts this year, lowering the federal funds rate to a range of 3.5% to 3.75% [5] Political and Economic Dynamics - The ongoing conflict between Trump and the Federal Reserve represents a clash between political and economic policies, with Trump advocating for rate cuts to mitigate the economic damage from trade wars, while the Federal Reserve seeks to balance inflation stability and economic growth [5]