Cooling US Core Inflation Strengthens Case For Fed Rate Cuts

(MENAFN- Investor Ideas) Investorideas ( Newswire) a go-to platform for big investing ideas, including mining stocks issues market commentary from deVere Group.

Cooling core inflation is strengthening the case for interest rate cuts, as the latest US price data points to easing price pressure across the world's largest economy, warns the CEO of global financial advisory organisation deVere Group.

The comments from Nigel Green follow today's release of the December Consumer Price Index, which showed core inflation rising by just 0.2% on the month and 2.6% on an annual basis - both readings coming in below market expectations.

The softer outcome reinforces growing evidence that underlying inflation pressures continue to moderate.

Headline inflation rose by 0.3% in December, with the all-items annual rate holding at 2.7%, in line with forecasts.

While policymakers assess both measures, core inflation remains the preferred guide for long-term price trends, making today's data particularly significant for the direction of monetary policy.

Nigel Green says the figures underline how quickly the inflation picture has changed.

The CPI data follows Friday's employment report, which also showed signs of a softening labour market. Payroll growth slowed more than expected, while wage gains moderated, adding to the case that demand across the economy is cooling.

The argument for easing now rests on three converging trends. Inflation no longer poses the same threat it did a year ago. Employment growth shows signs of fatigue. Financial conditions remain tight relative to the economic backdrop, keeping pressure on households and businesses.

Higher borrowing costs continue to weigh heavily on consumers, particularly in housing, credit cards, and small business financing. While easing inflation offers relief at the checkout, tight monetary policy threatens to blunt those gains by suppressing confidence and investment.

International markets also feel the consequences of prolonged US policy restraint.

Elevated rates support a stronger dollar, tighten global financial conditions, and place added strain on emerging economies carrying dollar-denominated debt. A shift toward easing would help stabilise capital flows and ease pressure across international markets.

Investors now see the risk profile shifting. The dominant threat appears less about inflation re-accelerating and more about policy remaining too tight for too long.

History shows that central banks often err by easing late rather than early, transforming manageable slowdowns into deeper downturns.

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