The February Consumer Price Index (CPI) is expected to serve as the latest test of whether the risk of a resurgence of inflation poses a threat to the U.S. economy, as investors debate the timing of a Federal Reserve interest rate cut in 2025.
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February CPI Forecast
The report is scheduled for release at 3:30 PM Riyadh time on Wednesday, amid expectations that the data will show a slowdown in price increases during the second month of the year.
The headline annual inflation rate is expected to reach 2.9% in February, slightly lower than the 3% recorded in January. On a monthly basis, prices are expected to rise by 0.3%, compared to a 0.5% increase in January.
On a core CPI basis, which excludes food and energy due to their volatile prices, it is expected to reach 3.2% over the year ending February, compared to 3.3% in January. Core prices are expected to rise by 0.3% on a monthly basis, compared to 0.4% in January.
The Impact of Inflation on Interest Rate Decisions
Core inflation remains above the Federal Reserve’s 2% target, which could hinder any potential rate cuts in the coming months.
In this regard, Bank of America economists added: “The longer inflation remains above the Federal Reserve’s target, even if it is due to temporary factors such as tariffs, the more likely it is that inflation expectations will move upward.
They added: If this happens, it will be difficult for the Fed to restore price stability.
Abdullah Mishlab
investing
