At the end of last year, the market was generally bearish on CPI data, thinking that a government shutdown would delay the decline in inflation — but this expectation was somewhat unrealistic. The actual released Core CPI was even lower than everyone expected, which was quite surprising.

But don’t celebrate too early. Among the categories of goods affected by tariffs, inflationary pressures remain very strong. This gives the Federal Reserve’s hawkish members plenty of room to maneuver — they can still justify continuing to hold off on rate cuts with the reason that "tariff shocks are still present." In other words, while this data offers some hope for inflation numbers, it may not necessarily change the policy stance.