Yesterday, the US announced December CPI data, and the market's reaction can be summed up in one word: "pleasant surprise."

Core CPI year-over-year dropped directly to 2.6%, lower than the expected 2.7%. This is not just a good-looking number but reflects that inflation is truly cooling down—one of the lowest annualized levels since March 2021. Month-over-month, it only increased by 0.2% (expected 0.3%), both below expectations, making it a "slightly dovish" report card.

**How about the specific components?**

The overall CPI performance remains relatively stable, with a month-over-month increase of 0.3% and an annual increase of 2.7%, basically in line with market expectations. But the real interesting part is the details—prices for used cars and trucks slowed significantly, dropping from 3.6% to 1.6%. Household goods and operating costs also decreased from 4.6% to 4%. These data indicate that consumer cost pressures are indeed easing.

However, one "stubborn" component has remained unchanged: **housing costs (shelter)**. This category still rose steadily by 0.4%, with an annual increase of 3.2%, remaining the largest weight in the CPI. In plain terms, service inflation still has stickiness; rent and housing-related costs are unlikely to decline rapidly in the short term.

The Fed’s closely watched PCE core inflation index is expected to be slightly higher than CPI (historically, PCE is usually 0.2-0.5 percentage points lower than CPI), but the overall trend is clear—**inflation is slowly approaching the 2% target**.

**What does this mean for the Fed’s next moves?**

This set of data essentially locks in the possibility that the Fed may continue to "wait and see" through the first half of 2026. Although inflation is still decreasing, it remains some distance from the comfortable 2% target. Without new economic shocks, the Fed is likely to adopt a "watch and wait" strategy, which is actually a positive signal for market liquidity.

For cryptocurrencies, this suggests that the rate-cutting cycle might be more moderate and prolonged than previously expected. At the same time, it reduces the risk of emergency rate hikes. Overall, this "neutral to slightly dovish" environment generally supports risk assets.