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The United States reported cooling inflation in January, with consumer prices rising 2.4% annually despite volatility caused by Donald Trump’s tariff policies throughout the previous year. The deceleration offers a mixed picture for global markets as the Federal Reserve weighs its next monetary policy moves.
Monthly Price Movements Show Mixed Signals
Consumer prices climbed 0.2% from December to January, according to the US Bureau of Labor Statistics data released Friday. The consumer price index, which tracks costs across a basket of goods and services, reflected the ongoing impact of trade policy changes implemented during Trump’s presidency.
Core inflation, excluding volatile food and energy sectors, accelerated to 0.3% monthly growth. This measure typically provides Federal Reserve officials with clearer insight into underlying price trends, as it removes sectors prone to sharp fluctuations.
Federal Reserve Decision Remains Uncertain
Economists had anticipated the slight easing in overall inflation figures, though the acceleration in core prices complicates the outlook. The mixed data leaves uncertainty around whether the Federal Reserve will resume interest rate cuts, a decision closely watched by European central banks and investors.
The inflation report comes as global markets assess the trajectory of US monetary policy, which significantly influences international capital flows and currency markets. European financial institutions monitoring dollar-denominated investments remain particularly sensitive to Federal Reserve policy shifts.
What’s Next
The Federal Reserve faces a complex decision-making environment with headline inflation moderating while core measures show persistent pressure. Market participants await clearer signals on the central bank’s policy direction as officials balance economic growth concerns against inflation control objectives.
Sources: The Guardian, Economic Times, France24
