The US Consumer Price Index (CPI) is set for release on Wednesday, with expectations of a 2.9% annual gain in prices, driven by higher fuel costs and food inflation. Seasonal factors are expected to keep headline figures elevated.
On a “core” basis, which strips out volatile costs, prices are expected to have risen 3.3% over last year for the fifth consecutive month. Economists warn that core services, such as shelter and medical care, will continue to drive inflation, albeit at a slower pace.
The Federal Reserve’s next challenge lies ahead with Donald Trump set to take office. His proposed policies, including tariffs and tax cuts, are seen as inflationary, complicating the central bank’s path forward for interest rates. The Fed is expected to maintain an interest rate pause, but markets remain split on whether a cut will occur.
Bank of America revised its outlook to zero rate cuts this year, warning of a hike possibility if year-over-year core PCE inflation exceeds 3%.
Source: https://finance.yahoo.com/news/december-cpi-report-expected-to-show-sticky-inflation-as-investors-recalibrate-rate-cut-bets-202650370.html