Key inflation metrics tracked by the Federal Reserve accelerated at the end of last year, underscoring why many Fed officials have turned cautious about supporting further interest-rate cuts.

The Federal Reserve’s preferred inflation gauge showed prices rose close to 3% in 2025, leaving the central bank more work to do to get cost-of-living increases back down to pre-pandemic lows.

Fed officials will get another month of inflation and employment data before their March meeting but are still expected to hold steady on adjusting the benchmark rate. Policymakers will want to

Core PCE prices accelerated to a 3% annual increase in December, hitting their highest level since February in a clear sign that inflation is staying stubbornly above the Fed's target of a 2% annual rate.

Inflation came in below economists' forecasts and slowed from December's 2.7% annual rate.

The great inflation shock of the 2020s, which helped bring President Donald Trump back to power, is in the rearview mirror now. But the hangover is all around.

The January CPI came in at 2.4% but real-time data and a structural lag in shelter costs suggest headline inflation has further to fall.

The core PCE price index was expected to increase 3% from a year ago in December. GDP was projected to rise at a 2.5% pace in Q4.