Markets predict Fed cut in March, even with bump in CPI. Headline inflation ticked up to 3.4 percent over the year ended December 2023, as both energy and shelter costs accelerated during the month. While this higher reading appears to complicate the Federal Reserve’s stance on monetary policy in 2024, market probabilities for a rate cut in March actually grew over 500 basis points, to about 70 percent shortly after the CPI data release. The continued cooling of core inflation, which ticked down to 3.9 percent in the 12 months ended December, is signaling that most consumer prices — aside from food and energy — remain on a steady downward path from their highs noted in June 2022.