CPI data will make the Federal Reserve more cautious about inflation risks, with more Fed watchers saying the central bank wouldn’t cut rates at all this year. U.S. headline CPI inflation rose 0.5% in January,

This week’s forthcoming Consumer Price Index report could show easing year-on-year inflation, increasing the potential for Fed interest rate cuts in May or June 2025.

Bond traders now expect the earliest Fed rate cut in December, as inflation concerns dampen hopes for a first-half ease. Despite inflation worries, recession probability remains low at 20%, with future economic focus shifting to potential tax cuts and deregulation.