J.P. Morgan: Cooling inflation sets Fed interest-rate cut bet

Group 1 - The core Consumer Price Index (CPI) rose by 0.2% in December, with the annual core CPI increasing to 2.6%, matching a four-year low [1] - Core goods prices remained stagnant in December, contrary to expectations for a rebound as post-shutdown data emerges [1] - Economists predict a gradual easing of inflation throughout 2026, with moderate inflation in labor, housing, and energy costs suggesting the Federal Reserve's current neutral policy rate is appropriate [1] Group 2 - The Federal Reserve's dual mandate focuses on maximum employment and price stability, requiring a careful balance in monetary policy [2][3] - The Federal Funds Rate influences short-term borrowing costs, affecting credit cards, auto loans, and student loans [4] - The 10-year Treasury Bond yield serves as a benchmark for longer-term interest rates, currently around 6.1% [4] Group 3 - President Trump has been vocal in demanding lower interest rates from Federal Reserve Chair Jerome Powell, who is currently under a criminal probe by the Department of Justice [5][6] - The Federal Open Market Committee is expected to maintain the Federal Funds Rate between 3.50% and 3.75% in its upcoming meeting [9]