No surprises on inflation this Wednesday. February's CPI came in in line with expectations. Year-on-year, the consumer price index rose 2.4%, the same reading as in January. On a core basis, CPI also increased 2.4%, its lowest level since 2021.

Despite fears of a tariff-driven inflation uptick, the disinflation trend broadly continued throughout 2025 and into early 2026.

That should be welcome news for investors and a positive sign for the Fed: inflation is still easing, and rate cuts are on the way. Even so, markets reacted only modestly to the data. The reason: most investors expect inflation to rise again in the coming months, given the energy shock relating to the conflict in the Middle East.

The strong inflation readings in recent months also reflect a technical factor. Without getting into the weeds of the BLS (Bureau of Labor Statistics), the CPI's non-publication in October (due to a shutdown) created a more favorable comparison base for a few months.

Finally, it is worth noting that the disinflation trend has so far been less clear in the PCE, the inflation gauge preferred by the Fed. The gap is explained by the weighting assigned to each component of the index.