On March 4, 2025, one person browsed a grocery store after U.S. President Donald Trump announced tariffs on Canadian and Mexican goods.
Arlyn McAdorey | Reuters
A report on Wednesday could convey some encouraging news amid concerns that President Donald Trump’s tariffs will exacerbate inflation.
The consumer price index in February is expected to show a wide range of goods and services in the world’s largest economy will show 0.3%. The forecast applies both to the full project measurement and to the core index that excludes turbulent food and energy prices.
Each year, this will give title inflation of 2.9% and core readings of 3.2%, both 0.1 percentage points lower than January.
The good news is that these rates represent a steady but rather slow decline in inflation over the past year. The bad news is that both are still well above the Fed’s 2% target, and may put the central bank on hold again when it meets next week.
“We expect weaker core goods and services based on broad slowdowns,” Morgan Stanley economist Diego Anzoategui said in a note. “Why still rises? For three reasons: (1) we expect higher prices of cars used due to past wildfires, (2) certain goods and services show remaining seasonality in February, and (3) we believe supply restrictions have increased inflation in February.”
The biggest question now is where to go from here.
Trump’s tariff actions Aroused market concerns Inflation rate rises and economic growth slows down. As Fed officials have historically been more adapted to the inflationary aspect of the dual authorization of price stability and full employment, prolonged periods of high prices may make the Fed longer.
But, feed the chair Jerome Powell His colleagues said that in their view, tariffs were historically a one-time price increase, rather than a basic inflation driver. If so this time, policy makers may look at any price losses in trade policy and continue to lower interest rates as the market is expected this year.
Goldman Sachs economists expect the Fed to continue to put aside until policy becomes clearer, and then lowers the central bank’s benchmark loan ratio by half a percentage point later this year.
“We’re seeing further disintegration in the process of rebalancing the automobile, housing rental and labor markets, although we expect healthcare to catch up with inflation and tariff escalations to increase,” the company said in a note.
The Bureau of Labor Statistics will release the CPI report at 8:30 a.m. ET.
