WASHINGTON (Reuters) - At their last meeting in December, U.S. Federal Reserve officials were worried about inflation getting stuck above their 2% target and had watched job gains seesaw in what seemed an emerging decline.

When they meet on Jan. 28-29, the mood around the most recent economic data at least will have shifted back towards more faith that inflation will continue to fall and a further easing of concern about the state of the job market.

The usual caveat among economists - "all things equal" - may prove especially important given the uncertainty about how the edicts of the new Trump administration may influence import prices, the size of the labor force, and the regulatory landscape.

Measures of policy uncertainty have spiked since Donald Trump's election win in November. But the data since December remains helpful to the bulk of Fed officials who feel the job market and the economy overall are in healthy shape, with inflation expected to ebb further in coming months.

After cutting its benchmark rate a full percentage point in the final three meetings of 2024, the Fed is expected to pause and leave it unchanged in January in the 4.25%-to-4.50% range as policymakers assess how much longer "tight" monetary policy is needed and how much they would need to cut to reach a "neutral" rate of interest.

INFLATION SEEMS SET TO IMPROVE

The latest Consumer Price Index report showed inflation rising slightly in December but was driven by volatile energy prices, something the Fed tries to factor out in its analysis of underlying price trends.

The core rate of inflation, excluding food and energy, fell slightly. More significantly for the Fed, CPI and other components of the separate Personal Consumption Expenditures price index suggest it rose at a roughly 2% annual rate through December and has been near the Fed's target on a three-to-six month basis.

Moreover, Fed officials feel the data are primed to turn in their favor this year. Since inflation was unexpectedly hot at the start of 2024, as those strong months fall from the annual calculations so-called "base effects" will help anchor inflation lower, all else equal.

JOB GAINS STILL HOLDING UP

"Downside risks to the labor market do appear to have diminished," Fed Chair Jerome Powell said after the December meeting. While the job market was still cooling, he said, it remained "solid," a situation the Fed hoped to maintain.

Data since then has held up, with the economy adding an estimated quarter of a million jobs in December and the unemployment rate falling to 4.1% - another reason officials feel comfortable pausing rate cuts at least for now.