US inflation holds steady at 2.7% in December, keeps Fed on cautious rate-cut path

US consumer price inflation remained unchanged at 2.7 per cent in December, the Bureau of Labour Statistics reported on Tuesday. This highlights that inflationary pressure has remained steady in the last months of 2025 as well. The inflation in the US has remained above the 2 per cent target of the Fed for some time now. The December inflation reading will be the first one to be released on the scheduled time after the US government came out of the longest economic shutdown.

Core inflation—which excludes volatile food and energy prices—stood at 2.6 per cent pointing to a gradual but incomplete cooling of underlying price pressures.

Sticky inflation keeps Fed cautious

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The steady inflation print strengthens the case for a prolonged period of restrictive monetary policy. Fed Chair Jerome Powell has repeatedly said the central bank needs “greater confidence” that inflation is firmly moving back to 2 per cent before it can begin cutting rates.

With inflation now plateauing near 3 per cent, policymakers are expected to maintain a data-dependent approach, keeping rates elevated for longer than markets had originally anticipated.