The Federal Reserve will remain on the sidelines, given the short interval between CPI data releases and government shutdowns.

According to ChainCatcher, citing Jinshi, Jeff Schulze, Head of Economics and Market Strategy at ClearBridge Investments, stated that while investors may cheer the December CPI report as further evidence of cooling inflation, the Federal Reserve will remain on the sidelines due to the short time lag between the data and the government shutdown, and the inherent uncertainty. This report is positive for risk assets and increases the likelihood of the Fed providing additional monetary policy support in 2026.