Stay informed with free updates
Simply sign up to the US inflation myFT Digest — delivered directly to your inbox.
US inflation held steady at 2.7 per cent in December, according to data that showed inflation pressures seemed to have been contained even as price growth remains above the Federal Reserve’s target.
Tuesday’s annual consumer price index figure was unchanged from November and in line with the expectations of economists polled by Bloomberg.
Core inflation, stripping out volatile food and energy prices, rose to 2.6 per cent.
The release from the Bureau of Labor Statistics will bolster Wall Street’s expectations that the Fed will hold rates steady this month after three cuts in 2025. The central bank’s target rate is 2 per cent.
The two-year Treasury yield, which is ultra-sensitive to interest rate expectations, dropped by 0.02 percentage points to 3.52 per cent. Two interest rate cuts in 2026 are currently priced in by traders in the futures market.
The US dollar index and stock futures also fell after the release.
The US central bank was plunged into turmoil this week after it emerged that the Department of Justice had taken the unprecedented step of launching a criminal probe into chair Jay Powell over a $2.5bn refurbishment of the Fed’s headquarters.
Powell said the move, which has stoked fears about an erosion of Fed independence, was designed to pressure policymakers into cutting rates more quickly, in line with the demands of President Donald Trump.
Tuesday’s CPI figure comes after last month’s release, which showed a sharp drop in inflation, drew criticism from economists who said it was flawed following a halt to data collection during last year’s record government shutdown.
This is a developing story