US inflation held steady at 2.7% in December, matching November's pace and aligning with forecasts, offering reassurance that price pressures remain contained. Core inflation, which excludes volatile food and energy, rose slightly less than expected at 2.6%, with housing costs being the main driver. Despite lingering above the Federal Reserve's 2% target, the figures support the view that inflation has peaked, easing concerns about tariff-driven spikes under Trump's trade policy. Economists anticipate inflation will continue to ease in 2026, though data distortion from last year's government shutdown remains a caveat. The muted inflation print strengthens expectations that the Fed will keep interest rates unchanged at its next meeting. Markets responded positively: the two-year Treasury yield fell to 3.52%, futures priced in two rate cuts for 2026, and equities rose while the US dollar softened.