Citi analysts said in a note Thursday that they now expect the Fed's first cut to occur in June, one month earlier than before.
Analysts, covering the global economic outlook and the firm's strategy, stated that Citi sees global growth this year slowing to a pace that is "well below trend" and inflation declining toward central bank targets.
"Headwinds from the recent tightening of monetary policy will continue to restrain the global economy," they wrote.
"In tandem, spending on services is likely to step down, labor markets will loosen a notch, and the manufacturing sector should start to shake off its sustained weakness," they added.
However, it is the soft US inflation data and Federal Reserve Chairman Jerome Powell's dovish rhetoric that has seen Citi adjust its expectations for the first rate cut.
While the first rate cut is now expected in June, the bank also now sees 125bp of easing this year versus 100bp previously. "Even with this revision, we remain somewhat more hawkish than the markets, which are expecting a cut by March and over 150 bp of total easing in 2024," analysts said.
However, they cautioned that "this year, similar to last year, is likely to see many twists and turns."