US Inflation Cools Slightly in December as Trump Pushes Credit Card Rate Cap and Escalates Fed Tensions

December CPI Shows Modest Inflation Rise

Consumer prices in the US rose **0.3%** in December from November, matching the prior month's increase. Core prices, excluding food and energy, also advanced **0.2%**, providing relief after concerns over data quality from the recent government shutdown.[2]

Gas and used car prices fell, signaling easing cost pressures. Economists note this pace could align inflation closer to the Federal Reserve's **2% target** over time.[2]

Trump Proposes 10% Credit Card Interest Cap

President Trump announced plans to cap credit card interest rates at **10%** for one year, threatening banks with legal action if not implemented by January 20. This follows voter concerns over rising costs highlighted in recent elections.[2][3]

The proposal targets major issuers like Visa, Mastercard, and American Express, whose stocks declined amid the news. Banks are bracing for impacts ahead of earnings reports.[3]

Fed Faces Mounting Pressure from Trump Administration

Trump has intensified criticism of the Federal Reserve, demanding sharper rate cuts to lower mortgage and borrowing costs. Fed's New York President **John Williams** countered that tariffs added about **0.5 percentage points** to inflation, but underlying trends remain favorable.[2]

Williams expects inflation to peak soon and decline toward 2% by 2027. Markets do not anticipate a rate cut until June, following three prior 25-basis-point reductions.[1]

• Key Fed tensions: Trump pushes for immediate relief; Powell pushes back on political interference.[3]
• DOJ subpoenas served to the Fed, heightening "Sell America" trade concerns on Wall Street.[3]

Upcoming Economic Data in Focus

This week brings critical releases including US retail sales, industrial production, and producer prices. Policymakers await clearer inflation signals post-shutdown disruptions.[1]

November's headline inflation fell to **2.7%** and core to **2.6%**, but data skepticism lingers. Friday's industrial production data for December will gauge manufacturing health.[1]

Broader Market Reactions

Wall Street edges lower amid Fed angst and Trump's policy shifts. Consumer optimism improved slightly, offsetting soft jobs growth from recent reports.[4]

Geopolitical tensions rose with Trump's announcement that the US would effectively "run" Venezuela, adding uncertainty.[5]

Fund managers show growing risk appetite tied to expected monetary easing and growth prospects.[1]