Inflation is proving stickier than expected, which could cause Fed to hit pause button on more interest rate cuts.

Economists polled by FactSet had expected payrolls to expand by 153,000, a drop from November’s 227,000 added jobs — which was revised down to 212,000 on Friday.

U.S. stocks were surging on Wednesday morning as Treasury yields fell after core inflation data came in below expectations, boosting bets that the Federal Reserve will still be able to cut interest rates this year.

Fed Chair Jerome Powell has said the central bank will keep its key interest rate elevated until inflation is back to 2%. As a result, Wall Street investors expect the Fed to cut its key rate just a single time this year, from its current level of 4.3%, according to futures prices.

Inflation is still there, according to the December Consumer Price Index (CPI) report, with the annual rate marginally increasing to 2.9%. With economic uncertainty looming, concerns have been raised regarding the Federal Reserve’s interest rate policy as core inflation,

Citi—which anticipates five rate cuts in 2025—has a downbeat forecast for a meager 0.7 percent growth. Bank of America is forecasting an above-consensus 2.4 percent growth for the year, hence their view for no rate cuts. ING, meanwhile, expects two percent growth.

A strong dollar makes money earned abroad worth less in dollar terms, raising the possibility that currency-translation effects might cause companies to miss Wall Street's targets for sales and earnings. At the very least, companies would not exceed those targets by as much as they otherwise would have.

The Federal Reserve will soon begin its quinquennial review of the monetary policy strategy, tools and communications employed to fulfill its congressional mandate.

The central bank said it had decided to leave the network after the group’s work “increasingly broadened in scope.”

The U.S. Federal Reserve will hold interest rates steady on Jan. 29 and resume cutting in March, according to a slim majority of economists polled by Reuters, as policymakers digest an expected barrage of new economic policies from Washington.

Prices increased by 2.5% on an annual basis in December, down from 2.6% in November. Full coverage from the team at MoneyWeek.

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