"It's good news," said Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research. But without a plunge in CPI, which the latest report pegged at 2.9% on a yearly basis, or significant softening in the labor market or economy, Jones expects the Fed to stay on hold about cutting short-term rates further.

Core CPI rose at a monthly 0.2 per cent rate, in line with expectations. However, on an annual basis it rose 3.2 per cent, slightly below market forecasts of a 3.3 per cent increase Wednesday’s release of December’s consumer price index was highly anticipated,