The U.S. economy is currently facing an uncertain outlook in terms of consumer prices. In December, the consumer price index (CPI) is expected to fall by 0.1% on a monthly basis, while core CPI, excluding energy and food, is anticipated to increase by 0.3%. Even with the expected decrease, the overall year-over-year rate of inflation is still expected to remain at 6.5%. As the Fed's next interest rate decision is set for February 1, Thursday's CPI report has become a major event for financial markets.
The futures market currently expects the central bank to raise rates by a quarter point at its next meeting, although some traders are hoping for a bigger decrease. Additionally, Federal Reserve President Susan Collins said in an interview with The New York Times that she is leaning toward a quarter-point hike. The overall economic outlook suggests that while consumer inflation is expected to remain high, the Fed may be leaning toward a more dovish stance in the future.