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US inflation rose to 2.9 percent in December, in line with expectations, strengthening the case for the Federal Reserve to slow the pace of interest rate cuts this year.

Wednesday’s data from the Bureau of Labor Statistics matched the forecast of economists polled by Reuters and topped November’s figure of 2.7 percent.

Core inflation, which strips out food and energy prices, was 3.2 percent in December compared to 3.3 percent in November.

US stock futures and government bonds rallied immediately after the release of the latest inflation data. Contracts tracking the S&P 500 equity gauge added 1.3 percent, while those tracking the tech-heavy Nasdaq 100 rose 1.5 percent.

In government bond markets, the policy-sensitive two-year Treasury yield fell 0.07 percentage points to 4.3 percent, while the benchmark 10-year yield – a proxy for global borrowing costs – decreased by 0.08 percentage points to 4.71 percent. Yields fall as prices rise.

Fed officials have already signaled that they plan to take a “cautious approach” to rate cuts amid growing concerns that inflation may not fall below the central bank’s 2 percent target.

Most investors and analysts believe the Fed will not cut rates again at its next policy meeting later this month. US central bankers have signaled in their own estimates that they will cut rates by an additional 50 basis points this year.

President-elect Donald Trump, who took office on Monday, laid out aggressive plans to impose tariffs on a wide range of imports, implementing a massive crackdown on undocumented immigrants. immigrants and implementing tax cuts.

Economists warn such plans could further fuel inflation.