U.S. Inflation Cools in February, Easing Pressure on the Fed

U.S. consumer prices rose at a slower-than-expected pace in February, signaling a potential cooling in inflation that could influence the Federal Reserve’s monetary policy decisions.

According to government data released on Wednesday, the headline Consumer Price Index (CPI) increased by 2.8% year-over-year, down from 3.0% in January. On a monthly basis, inflation rose by 0.2%, easing from 0.5% in the previous month.

These figures came in lower than economists’ expectations, who had forecast a 2.9% annual increase and a 0.3% monthly rise.

Impact on the Federal Reserve’s Rate Path

The cooler-than-expected inflation data could reinforce expectations that the Federal Reserve may consider rate cuts later in the year. However, policymakers have repeatedly stressed their cautious approach, emphasizing that inflation risks remain and that a near-term rate cut is unlikely.

The Fed is scheduled to meet on March 18-19, where officials will assess the latest inflation trends and their impact on future interest rate decisions. Lower inflation typically reduces pressure on the Fed to maintain high interest rates, which in turn supports gold prices and risk assets.