Inflation cools, experts say Fed likely to pause rate hikes

Inflation. It’s been the buzzword, right? Like that song you can’t get out of your head. But guess what? The latest report is in, and it’s… well, cooler. Think less fire, more simmer.

The U. S. Bureau of Labor Statistics dropped the data, and the annual inflation rate for February clocked in at 2. 8%. That’s a bit lower than January’s 3% and even lower than December’s 2. 9%. See? Chilling out.

What Went Down? (Besides Inflation, of Course)

Basically, prices across the board took a breather. The core prices? The ones that skip out on the crazy swings of food and energy? They rose at half the speed they did in January.

Why? A few things:

• Cheaper plane tickets.
• Shelter costs eased up.
• Auto insurance got a little less painful.

You’re at the grocery store. Everything’s still kinda pricey, but maybe not AS pricey as last month. Progress!

The Experts Weigh In: “Hold the Phone”

What does this all mean for the big picture? Well, the smart folks over at J. P. Morgan Wealth Management are saying, “Don’t get too excited. ” They’re suggesting investors use this as a chance to play the long game. You know, think about the future.

And those core goods? The stuff minus the food and fuel rollercoaster? They’re up 3. 1% year-over-year. Still up, but it’s the slowest climb since way back in April 2021.

The Not-So-Good News (There’s Always Some, Right? )

Medical care, used cars, and clothes? Those are still costing a bit more. But hey, it’s not all sunshine and rainbows, is it?

Zooming In: The Month-by-Month

The Consumer Price Index (CPI) – basically, a measure of how much stuff costs – rose less than expected month-over-month. Only 0. 2% in February, compared to January’s 0. 5%. That’s a win!

Energy prices? Up a smidge, 0. 2%. Fuel oil and natural gas went up, but gasoline took a dip. It’s a balancing act.

And eggs? Yeah, those went up 10%. Ouch. But the overall food category rose the least since August 2024. Maybe skip the omelet this week?

What Does This Mean for You?

Moody’s Analytics is calling February’s numbers “welcome. ” Core goods prices? Manageable. Medical care? Climbed a bit. Shelter? Downshifted. All good signs.

But here’s the real kicker: the Fed (you know, the folks who control interest rates) is getting closer to their 2% inflation target. Almost there. .. but not quite.

The Fed’s Next Move: A Big Question Mark

The experts are betting the Fed will hold steady at their upcoming meeting. No rate hikes (at least not yet). They’ll probably keep things as they are for a few months.

One economist, Gregory Daco from EY, thinks we might see two rate cuts later this year. Maybe in June and December.

The overall vibe? The Fed’s gonna “wait and see. ” Makes sense, right? No need to jump the gun.

The bottom line? The Fed will probably “hold rates steady,” until they “better understand the real [economic] impacts of tariffs and other policy changes. ”