“The direction of US inflation would be downward but disruptions to data collection caused by the government shutdown and potential tariff-related pressures make assessing inflation trend more difficult.”
- Productivity gains should help keep labour costs in check over the medium term.
- The fallout from US tariffs has not yet fully shown up in inflation data. we are closely monitoring services inflation.
- We think the Fed will cut interest rates twice this year. Political pressures on the bank may affect this view.
US CPI was up 2.7% YoY in December, unchanged from the previous month, meeting market expectations and significantly down from levels seen in early 2024. Core inflation — which excludes food and energy — rose 2.6%, slightly below expectations. It was weighed down by declines in used cars and trucks and by IT‑related goods.
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