Inflation in focus: How does new data complicate Fed plans?

The unexpected rise in inflation in December caused unease in the markets and complicated the Fed's decision-making. With the new data, investors are questioning whether a planned rate cut in March is still realistic.

The inflation report brought unexpected twists, complicating the Fed's plans. US inflation rose 3.4% from a year earlier, a higher-than-expected increase. This creates another challenge for Fed officials trying to determine the right time to cut interest rates.

Excluding the volatile food and energy categories, "core" inflation fell to 3.9%, lower than the 3.8% expected. These unexpected numbers may mean that a rate cut in March is not as certain as originally thought.

"March is too early for a rate cut. The CPI report shows that the central bank still has work to do in terms of containing inflation."

Loretta Mester, president of the Cleveland Fed

Although inflation has been milder than in the previous period, it is still at a relatively high level. Core inflation has fallen…