December's Consumer Price Index (CPI) will serve as the latest test of whether an inflation resurgence is a risk to the US economy as investors debate if and when the Federal Reserve will cut interest rates in 2025.

If year-on-year total and core CPI consumer inflation rates accelerate, financial markets risk turbulence as investors’ 2025 interest rate cut expectations fall further.

The Bureau of Labor Statistics is set to release the consumer price index report for December at 8:30 a.m. Eastern time on Wednesday. What the inflation data will mean for the Fed and interest rates.

U.S. Consumer Price Index report, due out on Wednesday, is expected to reveal a nudge upward in the headline inflation rate, while the core remained steadfast. With recent remarks from Federal Reserve officials signaling a more cautious and gradual approach to interest-rate cuts on the back of resilient economic data,