Interest Rate Cuts 'On Hold... If There Are Any At All In 2025' After December's Sticky Consumer Inflation Report: Economists

Consumer inflation eased slightly in December, with core CPI coming in at 3.2% on a year-over-year basis, below the 3.3% estimate.

Headline CPI rose 2.9% year-over-year, in-line with expectations. The print is the latest economic data that the Federal Reserve will consider before its next interest rate decision later this month.

Expert Ideas: Chris Zaccarelli, chief investment officer for Northlight Asset Management, highlighted the reductions in both month-over-month and year-over-year core inflation figures and sees the report as likely to alleviate some pressure in both the stock and bond markets.?

Joseph Brusuelas, RSM‘s chief economist, noted that inflation remains sticky and seems to have stalled above the Fed's target rate of 2%. He pointed to the service sector and housing as two of the most stubborn areas.?

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"The December CPI affirmed the growing inclination at the Federal Reserve that any further rate cuts ? if there are cuts at all in 2025 ? by central bank policymakers should be postponed until the second half of the year,” Brusuelas said.?

Larry Tentarelli, chief technical strategist for Blue Chip Daily Trend Report, said that while the lower core inflation number is a "key positive," he still does not see the Fed cutting rates in the first quarter.?

"Inflation data remains somewhat sticky and the labor market has been constructively strong. Based on that, we expect the Fed to stay on hold for the next few months, unless there is a sharp drop off in employment data," Tentarelli said. 

Jamie Cox, managing partner for Harris Financial Group, sees December's mixed CPI as a sign that inflation is "being pushed out of the system."?

"Core Inflation isn't accelerating and that's the story. The market may have had its hair on fire about inflation running away again, but the data do not support that conclusion," Cox said.  

Markets React: All major U.S. indices opened higher Wednesday with the SPDR S&P 500 ETF Trust (SPY) , tracking the S&P 500, up 1.71% at $592.12 and the Invesco QQQ Trust , tracking the Nasdaq 100 index, up 2.09% at $515.64 at the time of publication. 

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