Citi traders are betting the Fed will make three aggressive 50 basis point rate cuts

Citi traders are betting that the Federal Reserve will make three 50 basis point rate cuts this year, a bet that has beaten market expectations and those of the bank's economists. The Fed will aggressively ease policy if it sees weakness in the labour market, according to Citi's short-term rates trading arm. At the moment, swap transactions suggest there is about a one-in-three chance of a 50 basis point rate cut this month. Akshay Singal, global head of short-term rates trading at Citibank, said: "The Fed is not going to take baby steps. They are not showing any hesitation in raising rates in 2022 and they are not showing any hesitation in cutting rates. If today's jobs data disappoints, the Fed is likely to cut rates by 50 basis points, not just in September, but also in November and December. "" Powell made it clear in Jackson Hole that the Fed is focused on the labor market. "