On July 3, Citi Research pointed out in its U.S. Economic Weekly published on July 2 that the U.S. June employment report strongly refuted the necessity for a rate hike. In June, the U.S. non-farm payrolls added only 57,000 jobs, far below expectations, with the three-month average plummeting to 111,000. The drop in the unemployment rate is 'superficial,' actually stemming from a sharp decline in the labor force participation rate. Several factors that previously supported a hawkish stance—rising oil prices, accelerating wage growth, and core PCE above target—have since faded, indicating that 'the reasons for a rate hike have disappeared.' Citi maintains its baseline forecast: as the unemployment rate is expected to rise in the coming months, the Federal Reserve will resume rate cuts in October—first cutting by 25 basis points at the FOMC meeting on October 28, 2026, followed by another 25 basis points cut in December, bringing the federal funds rate range to 3.0% to 3.25% by the end of the year. Additionally, it is anticipated that there will be three more rate cuts in 2027, with the terminal rate range at 2.75% to 3.0%.