Annual inflation ticked up for a third straight month in December as food, energy costs rose, CPI report showed. But underlying price measure eased.

Consumer Price Index showed an acceleration to 2.9%, the highest rate since July. With such high inflation, the Fed is unlikely to cut rates in January.

Federal Reserve policymakers may be able to reduce interest rates a couple of times this year, traders bet on Wednesday, after a government report helped allay fears that inflation was accelerating in the final full month of Joe Biden's presidency.

The US Federal Reserve could cut rates three or four times this year if inflation data cooperates, with a first cut possible before July, a senior bank official said Thursday.

The stock market's stiffest headwind, a surge in Treasury bond yields, was blown aside Wednesday by a surprisingly benign inflation report, which could rekindle bets on multiple Federal Reserve rate cuts before year-end.