JANUARY 21, 2025 – INFLATION RISES IN DECEMBER, NEW HOPES FOR RATE CUTS
December’s inflation rate ticked up 0.2 percent to 2.9 percent for the year, and up 0.4 percent from November, driven for the most part by gas prices. The core CPI rose by 0.2 percent, its smallest gain since July and below expectations for a 0.3 percent rise.
Fed officials predict inflation for 2025 to be 2.5 percent, and the latest strong jobs reports have reduced concerns high interest rates are threatening the economy.
Recent polling shows traders see a 16 percent chance of no rate cuts in 2024 down from 26 percent before the inflation report. The chances of more than one rate cut rose to 50 percent from 36 percent.
The Fed is unlikely to cut rates in the short term, as they await clarifications on President Trump’s economic policies. The Federal Reserve meets next week on January 28-29.