Fed Rate Cuts Likely Delayed Despite Softer Inflation Data

Recent inflation metrics show easing pressures, but persistent challenges and policy uncertainties complicate the Federal Reserve's path forward.

December's Consumer Price Index (CPI) rose to an annual rate of 2.9%, while core inflation dropped to 3.2%, the lowest in over three years.
Analysts suggest the Federal Reserve will likely hold rates steady at its January meeting, with the first potential rate cut anticipated in May 2025.
Factors such as rising oil prices, consumer psychology, and proposed tariffs under the incoming Trump administration may sustain inflationary pressures.
Despite recent easing, inflation remains above the Fed's 2% target, with core services like housing and medical care contributing to stubborn price levels.
Economists caution that volatility and mixed economic data will challenge the Fed's ability to balance inflation control with economic growth.