Inflation

The central bank wants to let Trump's policies play out across the economy before deciding which way to move interest rates, and it's too soon to know what the impacts will be, the Federal Reserve chair said.

The personal consumption expenditures index showed headline inflation flat at 2.5%, but the details of the report explain the Federal Reserve's reluctance to adjust interest rates.

Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate President Donald Trump's policies.

Although a new administration means policy uncertainty, most analysts see the economy growing above trend next year, although inflation will remain a concern.

The overall price drop was offset by interest payments, allowing a broad gauge of the Treasury market to post a gain of about 0.7% this year through Dec. 30.

Federal Reserve Gov. Christopher Waller, a Trump appointee, said that while recent inflation readings are concerning, monetary policy would remain restrictive even if the central bank cuts interest rates by another quarter-point this month.

Underlying U.S. inflation eased for a fourth month on an annual basis in July, keeping the Federal Reserve on track to lower interest rates next month.

The Federal Reserve held firm on its current interest rate levels after its latest meeting, but inflation numbers are leading to talk of potential action in third and fourth quarters.

The so-called core personal consumption expenditures price index barely rose in November and trailed policymakers' 2% target by one measure, reinforcing the central bank's pivot toward interest-rate cuts next year.