US inflation cools more than expected, kindling hopes of Fed rate cut
South China Morning Post
by Agence France-PresseFebruary 13, 2026
AI-Generated Deep Dive Summary
US inflation slowed more significantly than anticipated in January, according to government data released Friday. The decline was driven by a dip in energy prices, with the Consumer Price Index (CPI) rising 2.4% year-on-year—a drop from December’s figure. This cooling trend has sparked optimism that the Federal Reserve may consider cutting interest rates later this year. However, analysts caution that sustained improvement is necessary for such action, despite President Donald Trump’s assertion that inflation remainsvirtually nonexistent.
The CPI data revealed a modest increase in key categories: food and shelter costs rose slightly, while healthcare expenses remained steady. This moderation suggests that broader economic factors, including weakening global demand and trade tensions, are contributing to the slowdown. Energy prices, which had been volatile throughout 2018, played a significant role in cooling overall inflation.
While the Fed has previously emphasized its data-driven approach to monetary policy, recent comments from officials have hinted at flexibility. Some members of the Federal Open Market Committee (FOMC) have signaled openness to adjusting rates if economic conditions warrant it. However, others remain cautious, noting that inflation has consistently fallen short of the central bank’s 2% target over the past year.
This development holds significant implications for global markets and consumer spending. A potential rate cut by the Fed could stimulate borrowing and investment, potentially boosting economic growth. However, analysts stress that any decision to lower rates would require consistent evidence of sustained inflationary relief—a threshold that has yet to be met. For now, the focus will remain on upcoming economic data to gauge whether this latest dip in inflation signals a broader trend or a temporary lull.
In summary, while January’s CPI figures offer hope for future rate cuts, the path ahead remains uncertain. Policymakers must carefully weigh the risks of premature action against the need to maintain economic stability. For readers interested in global economics, this underscores the delicate balance central banks face in navigating inflationary pressures and broader macroeconomic challenges.
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Originally published on South China Morning Post on 2/13/2026