Next CPI Inflation Report Could Reduce 2025 Fed Rate Cut Expectations

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Equity markets and bond prices fell hard after the release of the December jobs report, as the dollar and bond yields surged. However, market moves on January 10 were about more than the jobs report. Anticipation of this week’s forthcoming Consumer Price Index inflation report may also have been a key factor that moved markets. Base effects threaten to make year-on-year total and core consumer inflation rates accelerate in the December CPI report that will be released on January 15. Furthermore, if year-on-year total and core CPI inflation rates accelerate for December, financial markets could face significant turbulence as investors’ expectations for 2025 interest rate cuts fall further.Traders on the New York Stock Exchange (NYSE). Photo by Johannes EISELE / AFP.AFP via Getty Imag …

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