US core inflation stayed elevated in February, running at an estimated annualized pace of 2.7%, a level that has kept the Federal Reserve cautious about moving quickly to cut interest rates.
Fed officials are watching closely for potential effects from President Trump’s planned reciprocal tariffs for April 2, called “Liberation Day.” Those tariff measures could add upward pressure to prices, complicating the Fed’s inflation outlook.
Given this mix of uncertainty around trade policy, recent strength in consumer spending, and more moderate income growth, the Fed has opted to hold interest rates steady as it evaluates how administration trade actions and other developments will influence inflation and overall economic activity.