Economic growth cooled near the end of 2025 while inflation held firm, according to data released Friday that could complicate the Federal Reserve’s interest rate path.
Gross domestic produce rose at an annualized rate of just 1.4%, according to Commerce Department numbers adjusted for seasonality and inflation. Economists surveyed by Dow Jones had been looking for a 2.5% gain.
At the same time, inflation held firm in December, according to the gauge most closely watched by Fed officials.
The core personal consumption expenditures price index, which excludes food and energy, rose 3% in December, according to a separate release. That matched the consensus forecast but kept the pivotal inflation measure well above the Fed’s 2% target.
On a headline basis, the PCE index accelerated 2.9%, or 0.1 percentage point higher than expected.
Both indexes rose 0.4% for the month, compared to the respective forecasts for 0.3%.
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