U.S. Inflation Falls to 3.7% in January 2026; Fed Hopes Rate Cut by Summer

The U.S. Bureau of Labor Statistics reported core personal consumption expenditures (CPI) inflation rose to 3.7% in January 2026, up from 3.6% in December 2025. The core PCE index, a key Fed policy gauge, increased 0.3% month-over-month, matching the highest reading of the year. The Federal Reserve cited the moderation in its August 2025 meeting minutes and officials’ comments this week, indicating a potential pivot from tightening to maintaining or reducing rates by summer 2026. The pace of gains in energy and used-car prices moderated, while food and housing costs continued to rise.