US GDP cools to 1.4%, Fed rate cuts back in focus as inflation persists

• US GDP grew at an annualized rate of 1.4% in Q4 2025, significantly below the 2.5% forecast.
• The government shutdown is estimated to have subtracted about one percentage point from growth, impacting government spending and investment.
• Consumer spending slowed to 2.4%, while exports declined, contributing to the overall economic slowdown.
• Despite the headline figure, underlying demand indicators like final sales to private domestic purchasers showed steady private-sector demand.
• Inflation remained elevated, with the core PCE price index at 3% and headline PCE at 2.9%, both above the Fed's 2% target.