The Numbers Behind the Stall

The PCE Price Index - short for Personal Consumption Expenditures, the Fed's preferred way to measure inflation - tells us how fast prices are rising for the things Americans buy. At 2.8%, prices are climbing faster than the Fed's 2% target.

Core PCE paints an even trickier picture. This version strips out food and energy prices to reveal the stickier, harder-to-fix inflation underneath.

It jumped to 3.0% year-over-year and rose 0.4% in a single month. That monthly jump is the kind of number that makes Fed officials nervous.

One important note: this report arrived on a delayed schedule because the government shutdown in fall 2025 scrambled normal data collection. Some economists say the numbers may be slightly off as a result.

What It Means for Rate Cuts

The Federal Reserve has been waiting for clear evidence that inflation is returning to 2% before cutting interest rates. February's report doesn't give them that evidence.

Every month the Fed holds rates steady translates into higher mortgage rates, higher credit card rates, and more expensive borrowing for businesses.

What to Watch

March data will be the first to reflect the Iran war's impact on energy prices. If core PCE keeps climbing while the economy slows, the Fed faces a painful choice between fighting inflation and supporting growth.