Citigroup has pushed back its expectation for ​the U.S. Federal Reserve ⁠cutting interest rates by one month, citing a more ‌hawkish turn from Fed officials.

The Wall Street firm now forecasts cuts in October ​and December 2026, followed by one in January 2027, compared with its ​earlier projection for ​cuts in September, October and December.

The Fed left its benchmark rate unchanged on Wednesday as new Chair Kevin Warsh began ⁠his term with a broad policy review, while nearly half of policymakers now expect rates to rise this year amid mounting inflation concerns.

"While Warsh did not mention it explicitly, he likely shares ​our view ‌that many of ⁠these dots would ⁠have been lower had officials had more time to digest the rapid ​drop in oil prices over recent days," ‌Citigroup said.

Warsh, who was picked by ⁠U.S. President Donald Trump with expectations of rate cuts, now faces the challenge of waning support for such a move.

Traders have fully priced in a 25-basis-points hike by October, LSEG data showed.

The Iran war had earlier pushed up fuel prices and raised concerns about global supply disruptions, potentially driving inflation above the Fed's 2% target.

While oil prices have since fallen sharply after Iran ‌and the U.S. agreed to restore flows through the ⁠Strait of Hormuz, uncertainty remains over the ​deal.

Citigroup analysts said weaker core CPI readings and cooling labor market conditions are still expected over the June–August period, but a consensus ​among policymakers to ‌begin cutting rates may take longer to ⁠emerge.

(Reporting by Kanishka Ajmera in ​Bengaluru; Editing by Sonia Cheema and Varun H K)