All eyes will be on the latest US inflation numbers to be released by the Bureau of Labor Statistics (BLS) today. The December 2025 US CPI data are scheduled to be released on January 13, 2026, at 8:30 A.M. Eastern Time.
The inflationary trends in the US are crucial for the Federal Reserve’s decisions regarding interest rates in 2026. The US Consumer Price Index (CPI) data for November showed headline inflation rising by 2.7%, as against expectations of 3.1%, while core inflation rose by 2.6%, as against expectations of 3%.
US CPI December Expectations
The US CPI data for December 2025 is expected to show inflation continues to rise by 2.7% (same as November), while the core inflation rise by 2.7% after rising by 2.6% in November. Some economists predict the January 13 US CPI report to show inflation rising by 2.8% in December.
The US CPI data for December is expected to show a slight rise in inflation, attributed mainly to increasing item costs on the back of ongoing tariff pressures. Markets, overall, expect inflation to continue remain sticky with an upward bias, particularly in the first half of 2026.
Will US Fed Cut Rates in January
In 2026, the US Fed is likely to keep its benchmark interest rate between 3.50%-3.75% after three cuts in 2025. US Fed cut rates each by 25bps in September, October and December, rounding up the year with 75bps of rate cuts in total. The weakness in the labor market led the US Fed to go for rate cuts at the fag end of 2025.
The scenario looks different now. The December jobs report indicated slower hiring and a slight drop in the unemployment rate. A robust job market dampens the prospect of a rate cut.
Now, the US Fed may not want to cut rates in a hurry, which could reignite inflation. According to the CME FedWatch tool, nearly 95% of futures market participants expect no change in rates at the Fed’s January meeting. The next US Fed FOMC meeting is on January 27-28.
How much clarity emerges from the last month’s inflation report of 2025 remains to be seen. Any stickiness or emergence of inflationary pressures will solidify the reason for the US Fed’s pause, while a declining trend may just do the opposite.
Meanwhile, the pressure on US Fed Chairman Powell may be mounting. Trump has often stated in public that Powell should aggressively lower interest rates, which he has resisted, citing the data-based decision-making process at the central bank.
On Friday, the Department of Justice served the Federal Reserve with grand jury subpoenas, threatening a criminal indictment related to my testimony before the Senate Banking Committee last June.