The minutes of the Federal Reserve’s monetary meeting in December reveal a tolerance among policymakers for delaying additional interest-rate hikes. Low and stable inflation is a factor in the dovish message. Will tomorrow’s December report on the consumer inflation index (CPI) provide additional support for expecting a pause in the Fed’s recent monetary tightening?

Econoday.com’s consensus forecast calls for the annual pace of core CPI to hold steady at 2.2% through the end of 2018. If correct, consumer inflation will continue to print at a slightly faster rate over the Fed’s 2.0% target.

Nonetheless, the latest Fed minutes advise that the central bank can “afford to be patient about further policy firming.” Chicago Fed President Charles Evans on Wednesday reaffirmed the point, noting: “We have good capacity to wait and carefully take stock of the incoming data and other developments,” pointing to minimal evidence that inflation is set to run substantially above the Fed’s 2.0% target.

Meantime, the Treasury market’s implied inflation forecast aligns with a softer outlook on inflation. For example, the yield spread on the nominal 5-year Note less its inflation-indexed counterpart on Wednesday was 1.68%, which is moderately below the Fed’s 2.0% target.

The Capital Spectator’s point forecast (based on the average of nine models) for December’s core rate of annual inflation (seasonally adjusted) is 2.1%, marking a slight dip from November’s 2.2%. Looking into the near-term future, this projection anticipates that the year-over-year pace of core inflation will trend lower.

If there’s a factor that could keep inflation higher than expected it’s probably wages. Average hourly earnings in the private sector grew at an annual rate of 3%-plus in each of the last three months of 2018 – the fastest pace since the last recession.

Fed Chairman Jerome Powell, however, recently said that “the link between… wage inflation and price inflation is pretty weak.” Speaking in Atlanta last week he opined that “wages going up isn’t necessarily inflationary.”

By that reasoning, tomorrow’s CPI report may be softer than economists expect.