US Inflation Details Offer Room for Deeper Fed Rate Cuts

January US CPI came in lower than expected at 2.4% YoY, with core goods prices flat despite tariff concerns. This benign data has led markets to price in more aggressive Fed rate cuts for 2026.

Key Takeaways

• 1.January US CPI inflation was lower than expected at 0.2% MoM headline, bringing year-on-year rates to a four-year low.
• 2.Tariffs do not appear to be driving inflation yet as core goods prices remained unchanged in January.
• 3.A 6.5% jump in airfares was the primary inflation 'hot spot', which may lead to a lower core PCE print next week.

Table of Contents

• US inflation details offer room for deeper Fed rate cuts
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