The most recent data on the Federal Reserve's preferred measure of inflation revealed that prices rose more than anticipated in February, with inflation continuing to surpass the Fed's target of 2%. Investors have been monitoring economic indicators closely to gauge the effects of President Donald Trump's tariff policies on the economy.

In February, the "core" Personal Consumption Expenditures (PCE) index, which excludes food and energy prices and is a key metric for the central bank, increased by 0.4% from the previous month, exceeding economists' forecasts of a 0.3% rise. This uptick was higher than the 0.3% rise recorded in January.

On an annual basis, core prices climbed by 2.8%, surpassing Wall Street's projected 2.7% increase and exceeding the 2.6% rise seen in January. Overall PCE saw a 2.5% increase over the year, aligning with economists' predictions.

Additionally, data released on Friday revealed a 0.4% rise in personal spending for February, falling short of economists' expected 0.5% increase. This spending rebound followed an unexpected decrease in January, the first in two years, raising concerns about the direction of U.S. economic growth.

These figures emerged shortly after the Fed's decision to maintain interest rates at its March meeting, with a revised economic growth forecast for 2025 and an increased inflation outlook. Federal officials' median projection anticipates two interest rate cuts at some point within the year.