U.S. Inflation Relief, But An Extended Fed Pause Still Looks Likely
2025-01-15 10:36:00 ET
Summary
- After four consecutive 0.3% MoM prints, December's core inflation figure posted an improved 0.2% outcome.
- Nonetheless, the trend remains too hot for comfort and the Fed is likely to extend its well-telegraphed pause in rate cuts beyond March.
- But the run-up in Treasury yields and the stronger dollar will provide headwinds to growth, and we still look for three 25bp rate cuts in 2025.
Core inflation undershoots expectations
US consumer price inflation has come in at 0.4% month-on-month/ 2.9% year-on-year for headline and at 0.2%/3.2% for the core (ex food and energy). The headline was in line with expectations, but the core rate was a touch better than the 0.3% MoM rate anticipated - the core rate, it turns out, was 0.225% to 3 decimal places....
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U.S. Inflation Relief, But An Extended Fed Pause Still Looks LikelyNASDAQ: VGSH
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