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Double Threat: Elevated Core PCE and Impending Tariffs Complicate Fed’s Path Forward

US core inflation remains elevated at an estimated 2.7% annual pace for February, keeping the Federal Reserve cautious about rate cuts.

Fed officials are monitoring the potential impact of President Trump’s planned April 2 “Liberation Day” reciprocal tariffs, which could further pressure prices.

This economic uncertainty, combined with recent consumer spending growth and income moderation, has led the Fed to maintain current interest rates while they assess how the administration’s trade policies will affect inflation and economic activity.

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