Fears of elevated interest rates dampened the mood on Wall Street at the start of this year–but cooling core inflation and dovish comments by Federal Reserve governor Christopher Waller have given investors reason to feel a bit more cheerful this week.

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

Financial markets are still concerned about inflation. The Fed influences short-term interest rates, which are falling, but longer-term bonds like the 10-year Treasury are a better reflection of inflation expectations.

The US Federal Reserve could cut rates three or four times this year if inflation data cooperates, with a first cut possible before July, a senior bank official said Thursday.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

Due to the stronger-than-expected jobs report, Bank of America economists revised the Fed outlook for this year: “We no longer expect any additional rate cuts,” economists wrote in a report on Monday. "Inflation is stuck above target, with risks skewed to the upside, activity is strong, and the labor market now appears to have stabilized."

Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

A fter several months of hopeful signs in the battle against inflation, new data confirms that the fight is far from over. Inflation rose 2.9% on an annual basis in December, whic

Federal Reserve policymakers may be able to reduce interest rates a couple of times this year, traders bet on Wednesday, after a government report helped allay fears that inflation was accelerating in the final full month of Joe Biden's presidency.

The stock market's stiffest headwind, a surge in Treasury bond yields, was blown aside Wednesday by a surprisingly benign inflation report, which could rekindle bets on multiple Federal Reserve rate cuts before year-end.