Core Insights - Inflation eased in December, with core consumer prices rising at the slowest annual rate since March 2021, at 2.6% year-over-year [1][2] - The overall Consumer Price Index (CPI) increased by 0.3% month-over-month and 2.7% year-over-year, aligning with economists' expectations [2] Inflation Trends - Core CPI's 2.6% increase matches November's rate, indicating persistent inflation above the Federal Reserve's 2% target, although it has been declining over the past year [2][3] - The inflationary pressures on household food budgets remain significant, with food prices rising 0.7% in December, outpacing overall price increases [6] Sector-Specific Changes - The price of used cars and trucks decreased by 1.7% in December, contributing to lower core consumer prices [8] - Airline fares fell by 0.5%, and the overall transportation services category also saw a 0.5% price drop [8] - Energy costs contributed to the rise in headline prices, with gas prices falling by 5.3% in December, leading to a 2% decrease in the energy index from the prior month [8] Market Reactions - Following the December CPI report, market data indicated a 95% probability that the Federal Reserve would keep interest rates unchanged during its upcoming meeting [4]

Core Viewpoint - President Donald Trump is actively seeking to remove Jerome Powell as chair of the Federal Reserve, indicating he is "getting pretty close" to firing him and plans to announce a replacement in January [1][5]. Group 1: Trump's Criticism of Powell - Trump has publicly insulted Powell, labeling him "an absolute fool" and criticizing his decision-making regarding interest rates, specifically stating "too late Powell" for not lowering rates quickly enough [2]. - Trump intends to file a "gross incompetence lawsuit" against Powell, reiterating his long-standing grievances about Powell's management of interest rates and expenditures on the Federal Reserve building renovation [2]. Group 2: Powell's Tenure and Trump's History with the Fed - Jerome Powell, who has been the Fed chair since 2017, was nominated by Trump and reappointed in 2022, with his current term set to end in May 2026 [5]. - Trump has consistently called for Powell's resignation since taking office, expressing urgency in a Truth Social post in April, stating that Powell's "termination cannot come fast enough" due to Powell's criticism of Trump's tariffs and their potential economic impact [5]. Group 3: Legislative Support and Backtracking - In July, sources indicated that Trump consulted lawmakers about the possibility of firing Powell, receiving their approval for such a decision [6]. - However, Trump later appeared to retract this stance, suggesting it was "highly unlikely" he would proceed with firing Powell and that a new candidate would be chosen within the next eight months [6].

Politics & Policy - The U S may respond to Venezuela, vague details but escalation in pressure campaign [2] - Trump administration under pressure to share files from 2019 case related to Ghislaine Maxwell [3][4] - Trump administration launched a "Gold Visa" program, allowing individuals to pay for U S residency [5][6] - Democratic proposal for a three-year extension of tax credits faces challenges [7][8] - House passed a policy bill with 115 Democrats voting with Republicans, facing drama on the House floor [10] Immigration & Border Security - ICE agents are conducting new push practices amid arrests of American citizens during immigration operations [13] - Minnesota is experiencing tension and fear within the Somali American community due to immigration operations [15][16] Financial Markets & Economy - The Federal Reserve lowered interest rates by a quarter point (0 25%) [17] - The Fed Funds Rate is now around 4 4%, with inflation gauge (PCE) running hotter than the 2% target at 2 8% [19] - The Fed cut rates because liquidity/reserves were falling low, aiming to ensure the stability of the financial system [19][20] - Fed Chair Jerome Powell's term ends in May, with speculation about Kevin Hassett as a potential replacement [20][21] Natural Disasters & Weather - Washington State is experiencing evacuations due to flooding, with homes and farms under water [22] - Pacific Northwest is under flood watch due to a surge of rain [22] - Winter alerts are in effect for 17 million people, with lake effect snow impacting areas downwind of the Great Lakes [24]

Core Viewpoint - New Federal Reserve governor Stephen Miran advocates for a reduction in interest rates by approximately 2 percentage points, arguing that current rates are excessively high and could harm the US economy [1][2]. Group 1: Interest Rate Policy - Miran believes the appropriate level for the Fed's policy rate should be in the mid-2 percent range, significantly lower than the current 4.0% to 4.25% [1]. - He has proposed five additional rate cuts for this year, contrasting with the median expectation of two cuts for 2025 among his colleagues [2]. Group 2: Immigration and Economic Impact - Miran highlights a shift in US border policy, suggesting that reduced immigration is not being adequately factored into economic assessments, which may lead to misconceptions about the restrictiveness of the Fed's policy rate [3]. - He anticipates that up to 2 million illegal immigrants may leave the country by year-end, potentially lowering annual population growth from 1% to 0.4%, which could exert downward pressure on inflation [4]. Group 3: Inflation Expectations - Miran predicts that rent inflation in the Consumer Price Index will decrease from approximately 3.5% to below 1.5% by 2027, which would correspond to a 0.3 percentage point decline in the Fed's preferred inflation measure, the Personal Consumption Expenditures Index, currently at 2.9% [5]. - He emphasizes the importance of maintaining the Fed's 2% inflation target while cautioning against overly restrictive policies that could jeopardize employment [5]. Group 4: Colleague Perspectives - St. Louis Fed president Alberto Musalem supports recent rate cuts as a precautionary measure to mitigate unemployment risks but warns of limited capacity for further cuts without risking inflation [6].

Interest Rate Outlook - Federal Reserve official indicates current interest rates are high [1] - Potential for a 100 basis points (1%) rate cut into 2026 [1]