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US inflation rose to 2.9 percent in December, in line with expectations, underscoring concerns for the Federal Reserve to slow the pace of interest rate cuts this year.
Wednesday’s data from the Bureau of Labor Statistics matched forecasts from economists polled by Reuters and was higher than November’s 2.7 percent.
Core inflation, which excludes food and energy prices, was 3.2 percent in December, compared with 3.3 percent in November.
U.S. stock futures and government bonds rose shortly after the release of the latest inflation data. The S&P 500 equity gauge tracking contracts added 1.3 percent, while the tech-heavy Nasdaq 100 tracking gains 1.5 percent.
In government bond markets, the policy-sensitive two-year Treasury yield fell 0.07 percentage points to 4.3 percent, while the benchmark 10-year yield — a proxy for global borrowing costs — fell 0.08 percentage points to 4.71 percent. Yields fall as prices rise.
Fed officials have already indicated they plan to take a “cautious approach” to cutting rates amid growing concerns that inflation may not come within the central bank’s 2 percent target.
Most investors and analysts believe the Fed will not cut rates again at its next policy meeting later this month. US central bankers have indicated in their own estimates that they will cut rates by another 50 basis points this year.
President-elect Donald Trump, who takes office on Monday, has laid out aggressive plans to impose tariffs on massive imports, implement a massive crackdown on undocumented immigrants and cut massive taxes.
Economists have warned that such a plan could further fuel inflation.
