Citadel Flags Massive Rate Hike Risk Ahead of June FOMC Meeting

Citadel Securities has flagged a major risk of interest rate hikes in the US, citing inflationary pressures that are spreading into more sectors of the economy. In a note to clients, Frank Flight, Head of Macro Strategy at Citadel, noted that the inflation environment is becoming increasingly favorable for a more restrictive monetary policy.

The report highlights several factors contributing to the inflation trend, including easy financial conditions, supply-chain disruptions, and growth in the labor market. Additionally, the surge in artificial intelligence spending, estimated to reach $750 billion in 2026 and $1.25 trillion in 2027, is also weighing on the economy.

Citadel expects at least five Fed members to hint at future rate increases during the June FOMC meeting, with policymakers likely to eliminate any easing bias and release new projections indicating no rate cuts for 2026. The firm believes that the risks skew towards a rate hike as early as September 2026.

A hawkish Fed stance could present headwinds for Bitcoin and the crypto market as risk appetite shrinks, with Citadel eyeing potential rate increases in September, December 2026, and March 2027. If markets start to price in an extended period of tighter money, it could trigger a loss in valuation for crypto assets.