Inflation is proving stickier than expected, which could cause Fed to hit pause button on more interest rate cuts.

U.S. stocks were surging on Wednesday morning as Treasury yields fell after core inflation data came in below expectations, boosting bets that the Federal Reserve will still be able to cut interest rates this year.

Citi—which anticipates five rate cuts in 2025—has a downbeat forecast for a meager 0.7 percent growth. Bank of America is forecasting an above-consensus 2.4 percent growth for the year, hence their view for no rate cuts. ING, meanwhile, expects two percent growth.

Prices increased by 2.5% on an annual basis in December, down from 2.6% in November. Full coverage from the team at MoneyWeek.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

Fed Chair Jerome Powell has said the central bank will keep its key interest rate elevated until inflation is back to 2%. As a result, Wall Street investors expect the Fed to cut its key rate just a single time this year, from its current level of 4.3%, according to futures prices.

As a result, the Federal Reserve could be much less likely to cut borrowing costs again in the coming months. The Fed cut its rate three times last year in part out of concern that hiring and growth were flagging. Overall, the solid jobs figures suggest ...

In the wake of the report, traders believe it’s a near certainty that the Fed will keep interest rates steady at its January policy meeting. With the labor market stable, the central bank could keep rate cuts on hold through midyear. The Fed has cut rates at its last three meetings, taking the key interest-rate target range to 4.25%-4.50%.

The economy was expected to add 153,000 jobs last month, according to economists polled by financial-data firm FactSet. The unemployment rate ... kicking off a flurry of interest rate hikes from the Federal Reserve to tame price increases.

Collins, in prepared remarks for an event Thursday in Boston, said the economy was in a “good place,” but noted that progress on cooling inflation will likely be slower this year than previously anticipated.

The Federal Reserve will soon begin its quinquennial review of the monetary policy strategy, tools and communications employed to fulfill its congressional mandate.

As President-elect Donald Trump prepares to return to the White House, the U.S. dollar has, by at least one measure, never been stronger.