The US core CPI in December 2025 increased by 2.6% year-on-year and rose by 0.2% month-on-month, both below market expectations, indicating that the inflation cooling trend continues. Housing costs (up 0.4% month-on-month) remain the main driver, but the 0.7% month-on-month increase in food prices and the rebound in energy prices (up 0.3% month-on-month) show price stickiness. After the data was released, the market's probability of a rate cut by the Federal Reserve in April rose to 42%, but the probability of maintaining the current rate at the January policy meeting remains at 95%. Federal Reserve officials emphasized the need for more evidence to confirm that inflation is continuing to decline, and sticky components like housing may delay the pace of rate cuts. Despite the short-term increase in rate cut expectations, risks of political intervention (such as Powell facing a criminal investigation) and tariff transmission effects could intensify future inflation volatility.