• U.S. consumer prices increased in December as households paid more for gasoline and rental accommodation, leading to the largest year-on-year increase in 2-1/2 years and signaling that inflation pressures could be building.
The trend, if sustained, may push the U.S. central bank to raise interest rates at a faster pace than currently anticipated. The Fed has forecast three rate hikes this year.
The Labor Department said its Consumer Price Index rose 0.3 percent last month after a 0.2 percent gain in November. In the 12 months through December, the CPI increased 2.1 percent, the biggest year-on-year rise since June 2014. The CPI rose 1.7 percent in the year to November.
The gains were in line with economists' expectations. The CPI increased 2.1 percent in 2016, up from a gain of 0.7 percent in 2015. The Fed raised its benchmark overnight interest rate by 25 basis points to a range of 0.50 percent to 0.75 percent last month.
• Industrial production rebounded in December by posting the strongest advance in two years, though the monthly advance was led by utility output after an unusually warm month, The Index rises 0.8%, reversing 0.7% drop in prior month.
With the U.S. economy close to full employment and inflation headed toward the Federal Reserve's 2 percent goal, it "makes sense" for the U.S. central bank to gradually lift interest rates, Fed Chair Janet Yellen said on Wednesday.
"Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both," Yellen told the Commonwealth Club of California in San Francisco.
"In that scenario, we could be forced to raise interest rates rapidly, which in turn could push the economy into a new recession."
• The Fed chief said that she and other Fed policymakers expected the central bank to lift its key benchmark short-term rate "a few times a year" through 2019, putting it near the long-term sustainable rate of 3 percent.
However, Yellen’s speech at the Commonwealth Club of California will be finish on Thursday.
• The dollar inched up against the yen and kept broad gains against other major peers early on Tuesday, after rebounding sharply overnight on comments by Federal Reserve Janet Yellen suggesting U.S interest rates could be raised quickly this year.
The dollar's rise, however, was tempered as traders were cautious ahead of U.S. President-elect Donald Trump's inauguration on Friday.
It added 0.1 percent to 114.760 yen JPY=. The U.S. currency rallied nearly 2 percent the previous day, when it pulled ahead from a seven-week low of 112.570 and snapped a seven-day losing streak.
• The euro was little changed at $1.0628 EUR= after falling 0.8 percent the previous day.
• Oil prices fell to their lowest level in a week on Wednesday on expectations U.S. producers would boost output, while OPEC signaled a drop in the global oil supply surplus this year as the producer group's output fell from a record high.
U.S. West Texas Intermediate (WTI) crude oil futures settled down $1.40, or 2.7 percent, at $51.08 per barrel.
Brent crude futures, the international benchmark for oil prices, were down $1.51, or 2.7 percent, at $53.96 a barrel at 2:34 p.m. ET (1734 GMT).
Reference: Reuters, CNBC, Market Watch
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