If the US CPI continues to rise for the fifth consecutive time tonight, will the Federal Reserve hit the pause button on interest rate cuts to stabilize the situation?

Notice that forecasters expect the monthly US consumer price report to show a fifth consecutive month of increase, which strengthens the Fed's reasons to pause rate cuts. According to the median estimate from Bloomberg's survey, the core consumer price index, excluding food and energy, is expected to rise by 0.3% in December, while the overall index is expected to rise by 0.4%. The US Bureau of Labor Statistics is scheduled to release the CPI report on Wednesday. The data released on Wednesday is crucial for investors and policymakers. Since the last CPI data was released on December 11, the yield on the 10-year US Treasury bond has risen by over half a percentage point due to concerns about inflation heating up again. The expected median of a 0.3% increase in core CPI data hides the divide among forecasters, with 39 people predicting an increase, while 32 people predict a moderate 0.2% rise in core CPI data. US core inflation remains strong for the fifth consecutive month. Bloomberg economists Anna Wong and Chris G. Collins stated, "The December CPI report may raise concerns about the stagnation of the deflation process." "The market discussion is whether the yield on the 10-year US Treasury bond will break through 5%. This week, our expected CPI data and other macro data suggest that this is indeed possible." Rent The two most important components of the Consumer Price Index (CPI) - owner equivalent rent and primary residence rent - saw their smallest increase since the beginning of 2021 in November, leading people to expect that the long-awaited deceleration has finally begun. For the full year 2024, these numbers have been unstable, with most analysts expecting a slightly higher reading in December, but the magnitude may ultimately determine the broader core index's final level. A report preview by Morgan Stanley economist Diego Anzoategui stated, "We expect primary residence rent and OER to accelerate, but remain below the underlying trend for the year." "This is not our modal forecast, but core CPI data for December may reach 0.2%. Weak rebounds in rent or car insurance could easily push core CPI below 0.25%." Travel Categories related to travel - such as lodging, airfare, and dining out - are often seen as representatives of potential consumer demand, with prices showing strong increases in recent months. Analysts have mixed views on the outlook for hotel room prices, especially after a 3.2% increase in out-of-home accommodation category prices in November, the fastest monthly increase in over two years. Some expect a significant drop in room prices in December, while others, such as Samuel Tombs, Chief US Economist at Pantheon Macro, expect room prices to rise significantly again. "Travel set historic highs during the holidays; December air passenger numbers were 10% higher than in 2019," Tombs said. "In addition, according to STR Inc, average hotel room prices rose by 2.8% in December, unadjusted, a far cry from the 0.3% average increase in the previous three Decembers." Furniture After a sharp decline in prices at the end of 2023, the deflation speed of commodities (excluding food, energy, used cars and trucks) slowed in 2024, known as "core commodities." In November, they rose by 0.1%, mainly due to a 0.7% increase in household furniture and supplies. Skanda Amarnath, Executive Director of Employ America, said that Fed officials may seek clues about the overall inflation trajectory from core commodities amid concerns about the impact of policies proposed by the incoming Trump administration. "If tariff uncertainty manifests through expectations, price increases could occur before policy announcements," Amarnath said. "If core commodity prices start to rise from November, we will remain highly cautious about the prospect of further rate cuts."