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.

Inflation worries were re-ignited after consumer prices rose faster than expected in January, with Wall Street experts expecting caution from the Federal Reserve while keeping a wary eye on further tariff action from Washington.