Inflation Outpaces Expectations, Complicating Fed's Rate Decisions

Inflation defied predictions by climbing higher in February, with the core PCE price index rising 0.4% and the 12-month rate hitting 2.8%, complicating the Federal Reserve's decisions on future interest rate moves amidst mixed consumer spending and income data.

• The core PCE price index, a key Fed inflation measure, rose 0.4% in February, putting the 12-month inflation rate at 2.8%, both higher than expected.
• Consumer spending increased 0.4% in February, below the 0.5% forecast, while personal income rose 0.8%, above the 0.4% estimate.
• The higher-than-expected inflation reading is unlikely to speed up the Fed's timeline for cutting interest rates, especially given the uncertainty surrounding tariffs.