Stalled Inflation, No Rate Cuts in Sight? US December CPI May Face Dilemma

2026-01-13 08:32:12

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[CoinDesk] US inflation data continues to be the market’s focus. Forex.com Market Research Director predicts that in December, both the overall and core US CPI year-on-year growth will be around 2.7%.

The problem is—inflation has become stuck. The process of returning to the 2% target has been stalled for over a year, with the overall CPI fluctuating between 2.3% and 3%, and the core CPI remaining at relatively high levels between 2.5% and 2.9%, unable to move significantly downward.

Interestingly, although inflation remains above the Federal Reserve’s target, recent market focus has shifted to the employment market. Concerns about the labor market are seen as a more urgent consideration, which also supports market expectations for further rate cuts. However, these expectations may be tempered—implied probability of a Federal Funds rate cut in March is only about 25%, well below previous market optimism.

This combination of factors warrants attention for its impact on asset prices: sticky inflation suggests real interest rates may stay high, while a slowdown in rate cuts could also influence market liquidity expectations.

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