U.S. December unadjusted CPI year-on-year rose to 2.9%, marking the third consecutive increase and hitting its highest level since July 2024, in line with expectations (previously 2.7%). Meanwhile, core CPI fell to 3.2%, the lowest since August 2024, matching expectations of 3.3%.
The Fed's first rate cut is now expected in July rather than September, with cumulative cuts for the year revised from 28 to 40 basis points. Can market sentiment improve with core CPI's decline? Will the Fed adjust its policy direction as a result?