Investor confidence that the Federal Reserve will introduce rate cuts early this year has continued to rise amid a constant inflow of cooling inflation data. This comes after forecasts for the consumer price index (CPI) rising 3.8% in December compared to the previous year. This would be the smallest annual rise since May 2021.
According to the minutes from the Fed’s latest policy meeting in December, policymakers have acknowledged that interest rates appear to have peaked. Still, they “reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably”.
The producer price index, set to be released on Friday, is expected to show that inflation, excluding food and energy, is also cooling on an annual basis. Outside of the U.S., investors await UK growth data as well as central bank decisions from South Korea and Peru.