Inflation may keep Fed on hold until after Powell's chair term ends

Jan 13 (Reuters) - Inflation may not subside quickly enough for Federal Reserve Chair Jerome Powell to deliver another interest-rate cut before his term ends in May, with the Bureau of Labor Statistics ?reporting consumer prices rose 2.7% in December from a year earlier, in ?line with economists' expectations and well above the Fed's ?target.

Traders see a June cut, after ?Powell is no ?longer chair, as the most likely timing, and continue to expect a ?total of two rate ?cuts this year. Even so, interest-rate futures now reflect about a 40% chance of an April ?cut, up from 38% ?earlier. The ?report showed underlying consumer prices, excluding food and energy, rose a slightly less than expected 2.6%.

"A disinflationary ?trend is gradually taking shape," said Seema Shah, chief global strategist at Principal Asset Management. "As tariff pass-through effects become clearer and inflation concerns ease, the Fed is likely to shift towards a stance where one ?or ?two more cuts can be justified."

The data comes on the heels of an unprecedented move by ?the Trump administration to subpoena Powell in what the Fed chief said was a threat to the central bank's ability to set interest rates based on its assessment of what the economy needs rather than what the president wants.?

The Justice Department's ?demand for information provoked an outcry from world central bankers as well as pushback from some key lawmakers in Trump's Republican party.?

(Reporting ?by Ann Saphir; Editing by Andrew Heavens and Chizu Nomiyama )