The latest US December 2025 core CPI data has been released—year-over-year increase of 2.6%, and month-over-month increase of only 0.2%, both below market expectations. This indicates that the inflation slowdown is still ongoing, but don’t get too excited too early.

Housing costs continue to play a leading role, rising 0.4% month-over-month; at the same time, food prices increased by 0.7% month-over-month, and energy rebounded by 0.3%. The presence of these sticky components means that prices are not as tame as the surface data suggests.

The market moved in response, pushing the probability of a Fed rate cut in April up to 42%. But there’s a caveat—there’s a 95% chance that the policy meeting in January will keep rates unchanged, indicating no rate cut is on the immediate horizon. Fed officials also maintained their stance, stating that more evidence is needed to confirm that inflation is truly retreating, especially for stubborn components like housing, which could slow down the rate cut pace.

Additionally, two risk points should be watched: political uncertainties (such as certain investigation scandals) and tariffs, which are potential inflation triggers that could disrupt future price expectations.