Traders Adjust Rate Cut Expectations After Inflation Data
The Bureau of Labor Statistics reported that underlying consumer prices rose less than expected in December 2025. This prompted traders to increase the probability of a Federal Reserve interest rate cut in April 2026 from 38% to 42%, although a June cut remains the most likely scenario.
The Bureau of Labor Statistics' latest report revealed that underlying consumer prices rose less than anticipated in December 2025. This unexpected softness in inflation has led financial market traders to reassess their expectations for the timing of Federal Reserve interest rate cuts. Following the data release on Tuesday, January 13, 2026, traders increased the probability of an April 2026 rate cut from 38% to 42%. Despite this adjustment, the consensus still favors a June 2026 cut as the most probable outcome.
