Trump Presses the Fed for Rate Cuts After CPI Shows Inflation Cooling

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13 January 2026

President Donald Trump has stepped up his public calls for interest rate cuts, using the latest U.S. inflation data as ammunition.

Following the December CPI release, Trump argued that inflation has cooled enough to justify a looser monetary stance and warned that keeping rates high could weigh on economic growth.

Key Takeaways

• President Donald Trump is using the latest CPI data to intensify pressure on the Federal Reserve to cut interest rates, arguing policy is now too restrictive.
• December inflation data showed stabilization rather than acceleration, with headline CPI at 2.7% and core CPI easing to 2.6%, supporting the case that price pressures are cooling.
• Despite the data, the Federal Reserve and major banks remain cautious, signaling that more consistent evidence is needed before shifting toward rate cuts.

He described the inflation figures as encouraging and urged the Federal Reserve to move decisively, saying delays would keep borrowing costs unnecessarily elevated for businesses and consumers.

CPI Data Signals Stabilization, Not Reacceleration

The December Consumer Price Index showed headline inflation running at 2.7% year over year, broadly in line with market expectations. While the figure does not point to rapid disinflation, it does suggest that price pressures are no longer accelerating.

More important for policymakers, core CPI – which strips out food and energy – slowed to 2.6% annually, coming in below forecasts. This reinforced the view that underlying inflation dynamics are gradually easing rather than heating up again.

Why Trump Says the Fed Is “Behind the Curve”

Trump cited the CPI data as proof that the Federal Reserve, led by Chair Jerome Powell, is reacting too slowly to changing conditions. From his perspective, stable inflation combined with solid economic activity means monetary policy is now overly restrictive.

The argument mirrors a broader political stance: that lower rates would encourage investment, support credit demand, and sustain growth momentum without reigniting inflation.

Markets Expect Patience From Policymakers

Despite the cooling inflation narrative, market pricing suggests the Federal Reserve is unlikely to act immediately. According to CME FedWatch, traders overwhelmingly expect rates to remain unchanged at the January 2026 Federal Open Market Committee meeting, with only a small probability assigned to a modest cut.

This reflects a belief that policymakers want more than one or two favorable data points before adjusting course.

Fed and Banks Remain Cautious

Recent Fed minutes show officials remain wary after cutting rates several times last year. Policymakers have emphasized the need for sustained evidence that inflation is firmly moving toward target, especially amid uncertainty around fiscal policy and tariffs.

Large financial institutions echo that caution. Major banks have pulled back expectations for near-term rate cuts, arguing that lingering policy and price risks still warrant restraint.

What Comes Next for Rate Cut Expectations

Trump’s comments underline the growing tension between political pressure and data-driven central banking. While the latest CPI report strengthens the case for eventual easing, it may not be enough on its own to force the Fed’s hand.

If inflation remains stable or continues to drift lower in the months ahead, calls for rate cuts are likely to grow louder. For now, the December data provides supporters of easier policy with fresh evidence – but not yet a decisive trigger for action.