CICC: Inflation is moderate, but the Federal Reserve will not cut interest rates in January.

CICC pointed out that in December 2025, the US CPI increased by 2.7% year-on-year, in line with market expectations; the core CPI increased by 2.6% year-on-year, lower than market expectations. Looking at the breakdown, food prices rose significantly, while prices of goods related to tariffs remained stable, and rents and non-rent core inflation both rebounded significantly. Looking back at 2025, the transmission of inflation from Trump's tariffs was milder than expected, with the main inflationary pressure still coming from the service sector. Looking ahead, it is necessary to pay attention to whether companies that previously chose to absorb costs themselves and have not yet raised prices will now increase prices, and whether the resilience of the service sector will create structural inflationary pressure. CICC believes that for the Federal Reserve, moderate inflation data is not enough to push for another rate cut in January, so they will likely maintain the status quo in January, with the next rate cut possibly coming in March.