Inflation Remains Above Fed’s Target as Market Watches for Policy Shifts

The latest inflation data suggests price pressures are persisting, with the Federal Reserve’s preferred metric rising as expected in December but still exceeding its 2% goal.

The core Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy costs, increased by 0.2% from November—matching market forecasts and slightly above the previous month’s 0.1% gain.

Over the past year, core inflation remained at 2.8%, while overall PCE inflation edged up to 2.6% from 2.4% in November.

This update comes shortly after the Fed opted to pause its rate-cutting cycle following three consecutive reductions. Chair Jerome Powell acknowledged that inflation is still “somewhat elevated,” signaling that the central bank is waiting for further data before adjusting its policy stance.

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With economic policies in flux, analysts believe the Fed is holding off on major moves until there is more clarity on trade and fiscal developments. Powell pointed to potential shifts in tariffs, immigration policies, and regulatory measures as key variables influencing inflation trends.

Further uncertainty looms as President Trump has announced plans to introduce a 25% tariff on imports from Mexico and Canada starting February 1. Economists warn that such measures could prolong inflationary pressures, complicating the Fed’s path forward.

Alexander Zdravkov

Alexander has been working in the crypto industry for three years, during which time he has established himself through his active participation in monitoring market dynamics and technological innovations. His interest in cryptocurrencies and new technologies is not just a professional commitment, but a deep personal passion. He follows the news in the sector daily, analyzes trends, and is excited about every new step in the development of blockchain solutions. His enthusiasm drives him to continuously learn and share knowledge, as he sees the future in digital finance and its role in global transformation.