Citigroup Global Markets' Economist Says 2 More Rate Hikes Lined Up: 'We Think The Fed's Not Done Until July'

Johanna Chua, chief APAC economist at Citigroup Global Markets, reportedly said inflation is likely to be quite persistent and the Federal Reserve may go for two more rate hikes in coming times.

What Happened: Chua said Citi has a hawkish consensus view on the central bank's policy while arguing that the economy is not witnessing the kind of credit crunch that people are really worried about.

"There is a slowdown in kind of credit conditions, tightening of credit conditions, but not sufficiently enough," Chua told Bloomberg TV.

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The economist also explained why she thinks the central bank would continue hiking rates for two more times — a notion that contradicts the market's anticipation of a rate cut later down the year.

"We expect a month-on-month core CPI at 0.435%. And then in the next couple of months, we will have a 0.4% month-on-month handle going into the June FOMC. So, we actually think the Fed’s going to hike two more times. We think the Fed’s not done until July. So we’re a little bit more hawkish," she said.

Price Action: Wall Street is treading carefully in the wake of a barrage of developments that include the debt ceiling crisis, inflation data release and the Fed's future policy path. The SPDR S&P 500 ETF Trust SPY closed 0.44% lower on Tuesday while the Invesco QQQ Trust Series 1 QQQ lost 0.63%.

Chua also said recession is unfortunately the necessary by-product to bring inflation down towards 3%. "So therefore, we don’t expect the Fed to cut, maybe, until basically first quarter of 2024," she said.

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