The Federal Reserve's preferred measure of inflation — the Personal Consumption Expenditures (PCE) price index — showed core prices rising 3% year-over-year in February, according to data released Thursday. The reading matched analyst expectations and was little changed from prior months, suggesting price pressures remained persistent even before recent geopolitical and trade developments began to ripple through the economy.

The February data predates the outbreak of the Iran conflict and the imposition of new tariffs, both of which economists warn could push prices higher in the months ahead. The Fed has signaled it will not rush to cut interest rates while inflation remains above its 2% target, and the latest figures are unlikely to shift that stance in the near term.

Consumer spending data released alongside the inflation figures showed households continued to open their wallets in February, though some analysts cautioned that spending momentum could slow as tariff-related price increases work their way through supply chains. Energy and food prices remained volatile components of the broader inflation picture.

Separately, analysis of the tax provisions included in President Trump's tax law — covering exemptions on tips, overtime pay, and Social Security income — indicates the benefits will flow disproportionately to higher-income earners, according to reporting by NBC News. Critics argue the provisions complicate the Fed's task of managing inflation by adding fiscal stimulus at a time when price pressures remain elevated.

With the Iran conflict now adding uncertainty to global energy markets and new tariffs potentially raising the cost of imported goods, forecasters broadly expect inflation readings in coming months to diverge from the relatively stable February figures. The Fed's next policy meeting will weigh these crosscurrents as officials decide whether to hold, cut, or adjust their current interest rate posture.