US Inflation Drops to 2.8% in February

Inflation in the US fell more than expected to 2.8% in February, reinforcing the Federal Reserve’s intention to cut interest rates amid signs of slowing growth in the world’s largest economy. The annual consumer price index was lower than both January’s 3% and the 2.9% predicted by economists in a Reuters poll. Core inflation rose by 3.1%, missing expectations for a 3.2% increase. Futures contracts on stocks extended their gains, with S&P 500 futures rising 1.1%, compared to 0.8% before the data release. The dollar increased by 0.2% against a basket of six other major currencies. Markets now anticipate two rate cuts this year with an 85% probability for a third—marginally higher than before the data announcement. The Fed faces a tough balancing act as it tries to keep inflation under control without triggering a recession, amid growing concerns that President Donald Trump’s aggressive economic agenda is hindering growth. Businesses and financial markets have been unsettled by the chaotic implementation of Trump’s tariffs on major US trading partners, characterized by sudden escalations and reversals.