Fed’s preferred inflation gauge falling below policymakers’ forecast

Group 1 - Policymakers are expected to maintain the federal funds rate between 3.5% and 3.75% after the upcoming meeting, with traders anticipating one to two quarter-point reductions this year [3] - The core consumer price index rose by 0.2% in December and 2.6% for the entire year, matching a four-year low [4] - The Federal Reserve's preferred inflation measure is projected to fall below the 3% forecast for 2025, with the personal consumption expenditures price index (excluding food and energy) rising by 2.8% in November [6] Group 2 - President Trump has been advocating for more significant interest rate cuts, suggesting a reduction to as low as 1%, claiming that current rates hinder economic success [5] - The Beige Book report indicates moderate price growth across most of the Fed's districts, with only two districts reporting slight price increases [5][6] - Economic analysts expect inflation to continue to undershoot the Federal Open Market Committee's expectations this year due to low tariff revenues and signs of slowing wage growth [6]