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 )