OAN Staff James Meyers
8:13 AM – Wednesday, March 12, 2025
U.S. inflation cooled more than expected in February, with price growth remaining well above the Federal Reserve’s goal ahead of the central bank’s policy meeting next week.
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The Consumer Price Index (CPI) rose 2.8% over the past 12 months, which is below the 2.9% gain that economists had expected, the Bureau of Labor Statistics said Wednesday.
Both the annual and monthly increases in headline inflation were cooler than the expectations of LSEG economists.
Core CPI, which excludes volatile food and energy prices, came in at 3.1%, which is the lowest reading since April 2021.
As a result, Dow Jones futures increased 223 points, or 0.5%, due to the latest inflation report. S&P futures went 0.8% higher, and Nasdaq futures rose almost 0.9%.
“The tariff-battered markets are going to breathe a sigh of relief this morning, as higher inflation was the only thing that could make things worse,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, said in a note.
Meanwhile, President Donald Trump’s 25% tariffs on steel and aluminum imports took effect Wednesday morning. Canada retaliated by slapping the U.S. with 25% tariffs on $20 billion worth of U.S. goods Wednesday morning. Additionally, the European Union announced their own retaliatory tariffs, which will take effect in April.
As trade tensions have put fear in investors, the stock market has been unsteady.
The “Magnificent 7” tech stocks — Microsoft, Apple, Alphabet, Nvidia, Tesla, Meta and Amazon — have lost over $1.5 trillion off their combined valuation since the start of 2025.
In February, airline fares dropped by 4% as gasoline decreased in cost by 1%.
A bird flu outbreak has forced farmers to cull flocks and has caused a widespread shortage. The bird flu resulted in a massive 10.4% jump in egg prices in February, according to the latest report.
The data comes ahead of the Federal Reserve’s monetary policy meeting next week, when the central bank is expected to leave interest rates alone for the second consecutive meeting as uncertainty over inflation and the labor market has persisted. During its last meeting in February, the Fed left its benchmark federal funds rate at a target range of 4.25% to 4.5%.
“Today’s cooler-than-expected CPI reading was a breath of fresh air, but no one should expect the Fed to start cutting rates immediately,” said Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management. “The Fed has adopted a wait-and-see posture, and given the uncertainty of how trade and immigration policy will impact the economy, they’re going to want to see more than one month of friendly inflation data.”
Meanwhile, markets have priced in a 99% chance of the Fed holding rates steady when policymakers meet next week on March 18th-19th, which is up 96% a day ago and 94% a week ago, according to the CME FedWatch tool.
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