The Fed could really — really — use a break on the inflation front.

Policymakers would like to believe data covering August, September, October and November — when the numbers exhibited signs of percolating inflation — was just a testament to the idea that the proverbial “last mile” of the road to (arbitrarily-defined) price stability was destined to be “bumpy,” as Jerome Powell likes to describe it, for lack of a more eloquent term (or maybe it’s a nod to “plain English”).

But consider this: The first three (arguably four) months of 2024 were likewise characterized by a reheat, which means rekindled price pressures were evident in seven (at least) of 11 months for which the Fed has data for 2024. If December’s core CPI readout, due Wednesday, “surprises” on the upside, it’d be hard to make the case that 2024 was a year of demonstrable disinflation.

As the figure below shows, consensus expects a moderation in the monthly pace of underlying price growth across the world’s largest economy. Core inflation probably ran 0.2% in December, economists collectively reckon.

A consensus print would count as the coolest monthly print since the Fed started cutting rates. The sarcastic among you will say there are no coincidences — that in cutting rates 100bps over three months when the economy was still growing at a 3% clip, the Fed effectively turned up the knob on a natural gas range. “Of course inflation picked up,” critics will invariably quip. “What’d they expect?”

I hate to be abrasive (actually I don’t, otherwise I wouldn’t make it such a point of pride), but if you don’t see the disinflation in the monthly prints illustrated by the light grey bars in the chart above, that’s because it isn’t there.

Fed officials know the last mile’s in jeopardy. Upwardly-revised core inflation forecasts in the December SEP evidenced their concern. Some (“a number,” according to the latest meeting minutes) are worried about the read-through of Donald Trump’s policy promises, some aren’t, but the “median” official now expects just two cuts this year, while the market sees just one, with a slim chance of a second.

Of course, the Fed’s track record when it comes to projecting the path of the rate they set is abysmal, and market pricing tends to overshoot dramatically, so if I had to guess, the Fed will end up cutting more than twice in 2025. This is just as likely as not to be the year the most aggressive rate-hiking campaign in a generation finally “bites” for the US economy.

Anyway, there are a bevy of other notable US macro releases on deck, including retail sales, which probably rose 0.6% in December, according to consensus.

An as-expected headline would mark the fourth consecutive robust read on nominal spending, another sign the Fed’s rate cuts are stoking demand in an economy that, if anything, could do with less of it (less demand, I mean).

Also on the docket stateside: PPI, NFIB (traders will watch for any give-back from the prior two months’ “Trump bump”) and the first of this month’s housing updates including builder sentiment (covering January) and starts/permits (covering December).

Elsewhere, China will release activity data for December as well as GDP figures for Q4 and the full year 2024. Spoiler alert: Beijing will claim the Chinese economy met the Party’s growth target last year, which is to say the NBS will claim growth was 5% exactly. (Smirk.)