Citi's Rob Rowe Says October Rate Cut Is A Done Deal, Expects Another Reduction In December: Report

• Rowe said that despite the CPI remaining above the Federal Reserve’s 2% target, it won’t impact the central bank’s policy at the October meeting.
• He also expressed surprise that President Donald Trump’s tariffs have not translated into higher prices of goods.
• However, Rowe remains slightly concerned about the impact of levies on services.

Rob Rowe, Citi’s Head of Global Strategy, reportedly said on Friday that an interest rate cut in October is a done deal.

During an interview with CNBC, Rowe said that despite the CPI remaining above the Federal Reserve’s 2% target, it won’t have an impact on the central bank’s rate policy at the upcoming October meeting.

Tariff Impact On Inflation

Rowe also expressed surprise that President Donald Trump’s tariffs have not translated into higher prices of goods, even though he remains slightly concerned about the impact of levies on services.

However, as far as the central bank’s rate policy is concerned, Rowe remains confident that there will be a cut this month.

“We think it’s a done deal on an October rate cut, and we also know and feel that a December rate cut is expected.”

— Rob Rowe, Head of Global Strategy, Citi

Rowe’s comments come after the CPI report on Friday showed that consumer prices rose less than expected in September. According to data from the Bureau of Labor Statistics (BLS), on a seasonally adjusted basis, CPI rose 0.3% in September. On an annualized basis, CPI was at 3% before the seasonal adjustment.

Soft Landing

Rowe stated in the interview that he expects the U.S. economy to have a soft landing, rather than enter a recession. If the Fed eases the monetary policy, Rowe said that he does not see an increase in concerns about the economy.

Data from the CME FedWatch tool shows a 96.7% probability of a 25-basis-point rate cut at the October meeting.

Meanwhile, U.S. equities gained in Friday’s midday trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.92%, the Invesco QQQ Trust ETF (QQQ) gained 1.21%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) rose 1.1%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.1% at the time of writing.

Also See: Mark Carney Reportedly Says Canada Ready To Resume Trade Talks With US ‘When The Americans Are Ready’

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