The latest US inflation data is set to be published at 13:30 UTC on Thursday, with the release carrying added weight after the October CPI report was cancelled and November data were partially incomplete due to the federal government shutdown.
Markets Look to US CPI for Fed Clarity After Shutdown-Hit Inflation Data
18 December 2025 - 09:16 CET
By Matt Neill
Ahead of the CPI release, markets are anchored to September data, which showed further moderation in underlying price pressures as core consumer price inflation slowed to 3.0% year on year, down from 3.1%, according to the US Bureau of Labor Statistics.
Headline CPI rose 3.0% year on year, the highest reading since January. On a monthly basis, core prices increased 0.2%, easing from 0.3% in August.
For the upcoming release, headline inflation is expected at 3.1%, while core inflation is forecast at 3.0%, according to consensus estimates from Trading Economics.
The October CPI report was cancelled due to the federal government shutdown, leaving a break in the inflation data series.
As a result, today’s release is being assessed without a full month-to-month comparison, placing greater focus on the headline and core readings.
Fed policy backdrop
The Federal Reserve lowered the target range for the federal funds rate by 25 basis points to 3.50%–3.75% at its December meeting, following similar reductions in September and October, according to its policy statement.
Policymakers left their 2026 rate projections unchanged, signalling one additional 25 basis-point cut, with divisions within the committee over the pace of easing.
Ahead of the CPI release, market pricing suggests expectations broadly align with the Federal Reserve’s data-dependent approach.
CME FedWatch data indicate a 73.4% probability that the Fed will keep rates unchanged at its January meeting, with a 26.6% probability of a 25-basis-point cut.
Other signals
Beyond inflation, markets are also awaiting a fresh set of labour and regional manufacturing indicators.
Initial jobless claims are expected at 225,000, compared with the prior reading of 236,000, while the Philadelphia Fed manufacturing index is forecast at +3, up from -1.7 previously. Together, the indicators are expected to provide additional context on underlying economic momentum alongside the CPI release.
With gaps in the CPI series and inflation still above the Federal Reserve’s 2% target, today’s release carries added weight for near-term rate assessments. Markets remain focused on incoming data for a clearer indication of inflation direction.
