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Federal Reserve Chairman Jerome Powell speaks during a news conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC.
Credit: Anna Moneymaker/Getty Images

The Iran conflict is making investors more doubtful that the Federal Reserve will cut interest rates this year.

It is far from a wholesale repricing. Traders still see a 76% probability that the Fed will lower interest rates again this year, according to the CME Group’s FedWatch tool, which uses futures market pricing to gauge Fed policy views. 

But investors are anticipating a delay in any Fed cuts, as the central bank waits to see whether the oil price shock will prove temporary or have lasting consequences. Instead of a rate cut in June, more traders are anticipating the Fed to wait until September. And some are preparing for the possibility that the Fed will keep rates flat all year.

“Any hoped-for rate cuts are, for the moment, off the table,” wrote Richard de Chazal, macro analyst at William Blair.

Oil price spikes are typically temporary, he wrote, but the Fed may nonetheless adopt a hawkish tone at its meeting next week as it waits for evidence that’ll prove true. 

Inflation remains above the Fed’s 2% target, a fact already making some Fed officials hesitant to follow up on its rate cuts from last year.

The consumer price index rose by 2.4% in February compared to last year, according to the latest Bureau of Labor Statistics data. It’s down from its recent peak of about 9% in June 2022, when pandemic-era supply chain pressures collided with Russia’s invasion of Ukraine, leading to decades-high inflation.

But it’s at risk of surging again if oil prices stay high, wrote Thierry Wizman, a strategist at Macquarie. That’s because the prices of other commodities—iron, food, aluminum—could rise as the energy costs to produce and transport them rise.

“Energy price shocks transmit into production costs across virtually every sector of the global economy,” Wizman wrote. It is a knock-on effect that central bankers “must be keeping in mind as they recall the pattern from 2020-2024.”

The Case Against Hawkishness

Others are a bit more sanguine about inflation risks.

Markets “seem to be haunted by the ghosts of 2022,” wrote Bank of America economist Aditya Bhave, prompting investors to mistakenly anticipate a less dovish Fed this year.

The central bank raised rates aggressively after the Ukraine invasion in 2022, but that energy shock hit a much different U.S. economy, he noted. The unemployment rate when the Ukraine war started was below 4%, inflation was already over 5%, job growth was booming after the toll COVID inflicted, and “consumers were flush with COVID stimulus cash,” he wrote.

Demand was strong, enabling the Fed to prioritize bringing inflation back to 2% without majorly damaging the economy.

“By contrast, we now have a soft labor market, moderately elevated inflation and more modest fiscal support,” he wrote. “This sets us up for a more dovish Fed response if the oil shock is persistent.”

The job market is “too weak for oil prices to trigger sustained inflation,” wrote Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. The country added an average of 17,000 jobs a month over the last three months, according to last week’s jobs report.

And if oil prices stay high, consumers may cut back on spending as they feel pain at the pump. Energy-intensive businesses may also feel even more uncertain about the path ahead, Tombs added, weighing on hiring and thus economic activity in the months ahead.

“We think the weakening labor market will be the FOMC’s main worry by the summer,” Tombs wrote, prompting the Fed to cut rates three times this year—much like it did in 2024 and 2025.

No Clear Message

The Fed, however, may opt not to send any clear hints at its meeting next week.

Fed Chair Jerome Powell, whose term ends in May, is due to hold his regularly scheduled press conference on Wednesday. Reporters are sure to ask him to describe the debate among the Fed’s 19 committee members. Each of them, too, will release their quarterly forecasts for the economy—including whether they may support a rate cut this year.

“It’s too soon to say with any certainty when (or even if) the FOMC will ease after holding in March,” wrote Derek Tang, CEO of Monetary Policy Analytics, who sees the Fed cutting once this year in June.

The Fed’s textbook response would be to look past the inflationary impacts of short-lived energy shocks, he wrote. It’s one reason why Fed officials tend to focus on core inflation—price indices that remove more volatile food and energy prices.

“But the Fed’s wherewithal to look through a supply shock has been worn down somewhat by the bruising experience of recent years,” Tang wrote, pointing to a “prolonged” and still-unfinished return to 2% inflation after 2022.

There are many differences between now and 2022, he wrote. For starters, the Fed had to raise rates aggressively in 2022 because its benchmark rate was effectively 0% — it’s now significantly higher at 3.5% to 3.75%. But Fed officials are likely to “remain tentative about any further movements in the funds rate” for now, he wrote.

The Fed is “likely to proceed cautiously with further cuts as long as downside labor market risks seem contained,” and the job market stays stable, wrote Matthew Raskin, a Deutsche Bank strategist.

“But if the war comes to a relatively quick conclusion and oil prices retrace, some Fed easing this year is likely to be priced back in,” he added.

Nike shares are down about 13% from the start of the year, and 25% in the last 12 months
Credit: Jonathan Bachman / Getty Images

Key Takeaways

• Barclays analysts upgraded Nike's stock Wednesday, anticipating a turnaround from its recent slump. 
• The analysts pointed to progress in the athletic apparel maker's turnaround, and suggested its earnings may have bottomed.

Nike's stock could soon be due for a rebound, according to analysts at Barclays.

Barclays analysts upgraded Nike's (NKE) stock to "overweight" Wednesday and lifted their price target to $73 from $64, anticipating a turnaround from its recent slump. The shares slipped less than 1% to close just under $56 Wednesday, leaving them down nearly 25% over the past 12 months.

The analysts said they believe investors may have reached "peak skepticism" as Nike's financials hit a "fundamental bottom." Nike's "recent operational progress, financial inflections, and management’s disciplined actions" could point to a coming reset, they said.

Why This Matters to Investors

Nike replaced its CEO in late 2024, amid declining sales and growing competition from other brands. The upgrade from Barclays could be taken as a vote of confidence in the company's turnaround.

Barclays also said it expects Nike's improvements in North America could soon start to outweigh concerns about sales in China and worries about higher tariffs that have dominated in recent quarters.

Barclays' new price target is roughly in line with the Visible Alpha consensus target of about $72, which implies about 30% upside from Wednesday's close. Among the 14 analysts with current ratings, eight other brokers have recommended buying Nike's stock, compared with five neutral ratings, and just one "sell" rating.

Investors will get their next update on Nike's financials when the company reports fiscal third-quarter earnings after the market closes on March 31.

Nike shares are down about 13% year-to-date and have lost nearly a quarter of their value in the last 12 months.

Oracle on Tuesday reported better-than-expected quarterly results that suggested AI demand remains strong.
Credit: Andrej Sokolow / picture alliance via Getty Images

Key Takeaways

• Shares of Oracle soared on Wednesday after a strong earnings report that signaled AI demand remains healthy, boosting semiconductor stocks.
• Signs of strong AI demand, however, were not enough for the broader market—and most AI stocks—to overcome headwinds from soaring oil prices.

AI optimism can only do so much for this stock market.

Oracle (ORCL) stock soared Wednesday after the software and cloud computing giant topped quarterly earnings estimates and upped its revenue guidance. Oracle’s backlog—the financial metric that cemented its place in the AI conversation last year—grew $29 billion sequentially. That reinvigorated investor interest in the shares, though it didn't do as much for a broader market already up to its eyeballs in risk.

The company's latest quarter should lay the foundation for regaining investor trust after the last one gave them less confidence "in the company's ability to execute (and finance) to an aggressive set of targets,” wrote Morgan Stanley analysts Wednesday. Investors grew wary of Oracle stock last year as they debated whether the company’s growth was too dependent on one big, unprofitable customer—OpenAI. They also worried the company would need to bury itself in debt to convert its backlog into revenue. 

Why This Matters

AI optimism has repeatedly helped propel the stock market through thickets of uncertainty over the past few years. But Oracle’s strong results were failing to infuse markets with bullishness on Wednesday, suggesting the accumulation of economic and geopolitical headwinds has raised the bar for AI stocks.

Oracle’s results reassured Wall Street that demand for its AI infrastructure is broad. The company raised its 2027 fiscal year revenue guidance to $90 billion from $85 billion in October. “It's worth noting that the better outlook was not attributed to any single AI enterprise deal, rather multiple contracts,” wrote Bank of America analysts on Wednesday. “This suggests Oracle is benefitting from ramping AI adoption in the broader enterprise segment.”

Oracle’s guidance signaled to Wall Street that demand for cloud computing and AI services is still strong, boosting the shares of companies with the greatest exposure to the AI boom. The PHLX Semiconductor Index (SOX) was recently up 0.6% while the broader market fell. Shares of memory technology firms Micron (MU) and Sandisk (SNDK) were recently up 3 about 4% and 6%, respectively, while chip design giants Nvidia (NVDA) and Advanced Micro Devices (AMD) were marginally higher. (Follow along with Investopedia's live markets coverage here.)

But the report failed to boost AI stocks outside of the chip industry. Nuclear power providers Constellation Energy Corp. (CEG) and Vistra (VST) were down about 5% and 3%, respectively, on Wednesday. Specialty glass makers Amphenol (APH) and Corning (GLW), shares of which have been buoyed by data center demand for fiber optic technology, were also trading in the red. 

The optimism was also contained Wednesday by the litany of geopolitical and economic risks lashing the stock market of late. The Dow has fallen more than 3% since the U.S. and Israel launched strikes in Iran late last month. Those strikes have prompted one of the most acute energy crises in decades, with oil prices up about 30% amid a near-complete Iranian shutdown of the Strait of Hormuz, through which about a fifth of the world’s oil flows every day.  

Investors fear that sharply higher oil prices, if sustained, will slow economic growth and aggravate inflation that’s already running above the Federal Reserve’s target. Resurgent inflation, they worry, could tie the central bank’s hands if it needs to come to the rescue of an increasingly shaky labor market.

The SAVE plan was ruled illegal, and its borrowers will be moved to another repayment plan.
Credit: Photo by Salwan Georges/The Washington Post via Getty Images

KEY TAKEAWAYS

• A district judge has ruled the Saving for a Valuable Education plan repayment plan illegal.
• This effectively ends the Biden-era repayment plan, and the Department of Education is moving to transfer all borrowers still enrolled in the SAVE plan to another repayment option.
• The district judge did clarify that certain deferments and forbearances still count toward loan forgiveness.

The Saving for a Valuable Education plan was ruled illegal late Tuesday, effectively ending the Biden-era repayment plan.

For nearly two years, borrowers enrolled in the SAVE plan have been in limbo. Recently, more than 7 million SAVE borrowers have faced a rapid series of legal rulings with implications for their repayment plans.

A district judge revived the SAVE plan at the end of February, only for that decision to be reversed by the court of appeals on Monday. The appeals court sent the case back to the same district judge who, on Tuesday, approved a proposal the Department of Education first put forward in December that would effectively eliminate the SAVE plan.

Tuesday, the Department of Education said that over the coming weeks, it would begin moving borrowers still enrolled in the SAVE plan into another "legal repayment plan." Previously, the Department of Education encouraged all SAVE borrowers to transfer to the Income-Based Repayment plan, the only available income-driven repayment plan that will not be eliminated in July 2028.

Why This Matters

Millions of borrowers have spent over a year and a half in a payment pause, unable to make progress toward loan forgiveness. While this decision gives SAVE borrowers more certainty and the opportunity to move closer to forgiveness, many are expected to struggle when they are moved to a new repayment plan.

What That Means For Loan Forgiveness

Compared with most other repayment plans, the SAVE plan offered lower monthly payments. It also made the path to forgiveness easier and the qualifying repayment period shorter for some borrowers.

Borrowers on the Income-Based Repayment plan can get the remainder of their debt forgiven after making 20 or 25 years of payments. On the newly created Repayment Assistance Plan, which opens in July, borrowers will get forgiveness after 30 years.

However, the district judge confirmed on Tuesday that a Biden-era rule that allowed months in certain types of forbearance and deferment to count toward time-based forgiveness was not included in the lawsuit that was ruled on this week. That means borrowers are still able to progress toward forgiveness while on these types of payment pauses:

• Cancer treatment deferment
• Rehabilitation training program deferment
• Unemployment deferment
• Economic hardship deferment
• Military service deferment
• Post active-duty student deferment
• National service forbearance
• National Guard duty forbearance
• Department of Defense Student Loan Repayment forbearance
• Some types of administrative forbearance granted on or after July 1, 2024
• A bankruptcy forbearance on or after July 1, 2024, if the borrower made the required payments on a confirmed bankruptcy plan.

The show of support from leading AI chipmaker Nvidia could boost confidence in shares of Nebius
Credit: CFOTO / Future Publishing / Getty Images

Key Takeaways

• Nebius shares jumped Wednesday after the AI infrastructure company announced a new partnership with Nvidia.
• Nvidia said it will invest $2 billion in the company, adding to its earlier investments in Nebius.

Nebius shares are soaring Wednesday on a vote of confidence from AI chip leader Nvidia.

Shares of Nebius Group (NBIS) were up over 16% in recent trading, after the AI infrastructure firm announced a partnership that includes a $2 billion investment from Nvidia (NVDA). Nvidia shares were little changed.

The companies said the deal will build on Nebius' existing partnership with Nvidia to expand cloud capacity to support AI. “Together, we are scaling the cloud to meet the surging global demand for intelligence,” Nvidia CEO Jensen Huang said in a release.

Why This Matters to Investors

The added support from leading AI chipmaker Nvidia could boost confidence in shares of Nebius, which have climbed this year but remain off their October highs.

Nvidia first revealed a stake in Nebius in its quarterly 13-F filing last February. It has held that stake in Nebius steady even as it sold positions in some other tech stocks in recent quarters.

The chipmaker's latest investment in Nebius adds to a string of recent deals. Earlier this month, Nvidia also announced $2 billion investments in Coherent (COHR) and Lumentum (LITE).

With Wednesday's gains, Nebius shares have added close to a third of their value since the start of the year, and nearly quadrupled in the last 12 months.

Inflation’s bite means your savings may be slipping—but one straightforward move can help you stay ahead.
Credit: Ugur Karakoc / Getty Images

Key Takeaways

• Inflation held at 2.4% in February, meaning any savings earning less than that is quietly losing purchasing power.
• The good news: It’s easy to outpace that level with a top high-yield savings account paying 4.15% to 5%.
• Want to lock in that edge? A top-paying CD guarantees your APY for months or years, even if savings rates fall.

Is Your Savings Rate Higher Than Inflation? Here’s How to Check

The latest Consumer Price Index (CPI) shows inflation holding at 2.4% for a second straight month. That means the bar for your savings hasn’t moved: If your account pays an APY below 2.4%, your money is still losing purchasing power.

That’s because inflation doesn’t just affect what you spend at the store. It also decides whether your savings are building real value—or slowly shrinking in buying power over time. When your interest rate trails the inflation rate, that gap works against you, even if you keep adding to your balance.

That’s where many savers run into trouble. The national average savings rate is just 0.39%, and some of the largest banks pay as little as 0.01%. With returns that low, even a moderate inflation reading can turn a positive balance into a real-world loss.

The difference compounds quickly. If you're earning, say, 0.50% APY while inflation runs at 2.4%, that leaves you 1.9 percentage points behind each year. Though the percentage gap is the same regardless of your balance, the larger your savings, the bigger the dollar impact.

But you’re not stuck with those returns. Dozens of savings accounts and CDs currently offer APYs high enough to trounce inflation—you just have to know where to look.

Why This Matters

The inflation rate is the minimum your cash needs to earn to maintain purchasing power. If your savings APY falls short, moving to a higher-yield account can close the gap and keep your money growing in real terms.

The Easiest Way to Outpace Inflation Right Now

The most straightforward way to protect your savings is to earn an APY that exceeds today’s inflation rate. High-yield savings accounts make that possible—without locking up your money.

These mostly online banks and credit unions pay significantly more than traditional institutions while still giving you full access to your cash. And the gap isn’t small.

Right now, the 10 best high-yield savings accounts offer 4.15% APY or better—with some reaching as high as 5.00%. That’s comfortably higher than today’s 2.4% inflation rate, meaning your savings can truly grow.

As the chart below shows, top-tier savings yields have remained above inflation for three years now—a nice opportunity for savers who move their cash to competitive accounts.

It's Not Too Late to Move Your Money

Though the Federal Reserve may cut interest rates this year, which would push savings yields lower, it’s still worth moving to a top-paying account now. Every month you stay in a low-rate account is another month your money falls further behind.

To capture inflation-beating returns, you may need to look beyond your primary bank. Online banks and credit unions often lead the market, and our daily ranking of the best high-yield savings accounts makes it easy to compare today’s top rates. If you’re holding significant cash at a traditional bank, moving it to a high-yield account could be one of the simplest ways to improve your returns.

Yes, Your Deposits Are Protected

Deposits at any FDIC-insured bank or NCUA-insured credit union are backed by the federal government if the institution fails. Coverage is identical—up to $250,000 per person, per institution—regardless of the institution's size.

Before Rates Fall, Consider Locking In a CD

A certificate of deposit (CD) can help you preserve today’s elevated returns—even if savings rates begin to drift lower. Unlike a savings account, a CD guarantees the APY you lock in for a set term, whether that’s a few months or several years.

That rate lock can be especially valuable in an uncertain rate environment. While markets expect the Federal Reserve to lower rates sometime this year, the timing and pace remain unclear. If cuts arrive, savings yields will likely move down as well—but any CD you already hold will continue paying its full rate until maturity.

In other words, a CD can extend your inflation protection well into the future, no matter what happens in the broader rate environment.

Right now, the top nationwide CD pays 4.30% on a 6-month term, and more than a dozen additional offers pay 4.10% or better on terms up to 24 months. If you’re comfortable locking in longer, you can even secure a guaranteed 4.00% to 4.05% return for 3 to 5 years.

CDs are easy to hold anywhere

Because CDs require no ongoing management until maturity, they’re easy to open at a bank or credit union where you don’t already have accounts. That flexibility lets you shop nationally for one of today’s best CD rates without moving your everyday banking.

Tensions in the Middle East appear to be weighing on investor hopes that the war will be brief.
Credit: Thibaud Moritz / AFP via Getty Images

Key Takeaways

• The IEA and member countries agreed to distribute 400 million barrels of oil, double the agency's biggest-ever release in 2022.

• Brent crude prices rose to above $90 per barrel while West Texas Intermediate climbed to around $85, driving energy stocks higher.

A global energy watchdog rode to the rescue. The oil market shrugged.

The International Energy Agency and its member countries on Wednesday said it would tap its reserves and distribute 400 million barrels of crude—its biggest ever distribution, double the 2022 release that followed Russia's invasion of Ukraine. Crude oil prices, however, ticked higher after the IEA announcement, with Brent crude and West Texas Intermediate up about 5% to around $92 and $86 per barrel, respectively. Energy stocks, including those of including oil majors Exxon (XOM) and Chevron (CVX) were also higher, while U.S. broad market indexes were recently in decline. (Oil futures, to be sure, are off three-digit highs seen earlier this week.)

Escalating tensions in Iran appear to be weighing on investor optimism that the war will be brief, and disruptions to oil supply transitory. Meanwhile, market experts and economists are warning about the consequences of higher-for-longer crude prices as vessels are trapped in the Persian Gulf, ships have been attacked in the Strait of Hormuz, and neither Iran nor Israel have made concrete movements toward a truce.

WHY THIS MATTERS TO YOU

Long periods of high crude oil prices are bad for the average person, because they drive up gas prices, the cost of air travel, and—when coupled with weaker asset prices and higher interest rates—can induce a recession.

Prediction markets are signaling expectations that the war will go on for at least six more weeks and crude prices will stay high. Polymarket bettors put the highest probability, about 78%, that the Iran-U.S./Israel war will be over by the end of June. They also put the highest probability, or 31%, on West Texas crude topping $95 by the end of this week.

Some historic parallels, like the Ukraine-Russia war, would suggest that peak oil prices are over and done with, according to Adam Turnquist, Chief Technical Strategist for LPL Financial.

"Technically, Brent has fallen back below the 2023 and 2024 highs ($97.69 and $92.18, respectively), and despite still‑strong momentum, the inability to hold those levels indicates waning buyer enthusiasm," he wrote in emailed commentary today. "We see this as a positive sign not only for a potentially swift resolution with Iran, but also for oil markets and the broader equity market."

Other market experts warn that investors should brace for pain across asset classes.

“Geopolitical uncertainty can pressure both stock and bond prices at the same time, even when the underlying economy is resilient,” wrote Josh Hirt, Vanguard senior U.S. economist, in a note Wednesday.

CarMax's average selling price last year was a bit above $26,000.
Credit: Michael Yanow / NurPhoto via Getty Images

Key Takeaways

• A new CEO is set to take over at used-car buyer and seller CarMax later this month. Activist investor Starboard Value has a few ideas for the company, which hopes to reverse a substantial share slide over the past year.
• One of its suggestions: Clip a few hundred bucks off its prices and shift to more dynamic pricing in order to make it more competitive for market share.

An activist investor has an idea for selling more used cars: charge less for them.

Shares of CarMax (KMX) were recently up about 2%, after rising as much as 8% earlier Wednesday following news that activist firm Starboard Value had nominated two directors to the used-car seller's board. In a letter to incoming CarMax CEO Keith Barr, who was named last month and is set to take over in a few days, the firm offered support for the company's new chief but also said its "recent performance has fallen well short of its underlying potential." CarMax shares are up this year but off more than 40% over the past 12 months, while competitor Carvana's (CVNA) stock has raced higher.

Why This Matters to You

Some used-car buyers like to battle for every dollar and cent they can. An investor in popular used-car buying and selling service CarMax has an idea that might help: trim prices a bit to make its offerings more competitive. Experts have a range of other tips for buyers, including sticking to a budget and getting pre-qualified if you're using a loan.

Starboard's suggestions included updating the company's digital trade-in experience; reduce reconditioning costs; and focusing further on cost controls. But it also suggested something comparatively straightforward: trimming prices. Starboard believes the company's per-unit gross profit targets have been "too rigid," hurting market share, and it suggested reducing prices by $100 to $300 per vehicle and using a data-driven pricing system more attuned to local markets.

"Make no mistake," Starboard wrote. "We expect you to remain disciplined and expect you to protect and expand margins. That being said, the market has become more transparent, which may require more dynamic pricing to maintain transaction volume."

Money is money; still, the adjustments Starboard suggests might not change your car-buying calculus—or, at least, your initial response to a sticker price—too much. The company's average selling price last year was a bit above $26,000.; that figure fell in 2025, while unit sales rose.

"Our engagement with Starboard to date has been productive and we remain focused on continued constructive conversations," CarMax said Wednesday. "We are pleased that Starboard agrees with our Board that Keith is the right leader to deliver on the potential of this business."

With Wednesday's move higher, Oracle shares recovered some of their recent losses
Credit: Justin Sullivan / Getty Images

Key Takeaways

• Oracle shares led the tech sector higher Wednesday as investors cheered the cloud giant's better-than-expected earnings and stronger outlook.
• Wedbush analysts said the results come as a "huge relief" for the tech sector and could help improve confidence in Oracle.

Can Oracle's strong results breathe more confidence back into the AI trade?

Oracle (ORCL) shares were up over 13% in recent trading, leading other tech stocks higher, a day after the company posted better-than-expected earnings and lifted its revenue outlook for fiscal 2027.

Wedbush analysts said Oracle's results come as a "huge relief" for the tech sector, considering recent worries about the industry's ability to deliver on its hefty investments in AI infrastructure.

Why This Matters to Investors

Oracle's stock has taken a bigger hit than many other tech stocks in recent months amid concerns about its dependence on OpenAI, and its debt load as it finances a massive data center buildout. Wednesday's move higher could point to easing concerns that would benefit the sector broadly.

Morgan Stanley analysts wrote that the latest results could "form a foundation for Oracle to begin rebuilding" trust from investors, after its revenue fell short of estimates in December.

While ratings could still change following the report, all but one of the 12 analysts with current ratings tracked by Visible Alpha consider Oracle shares a "buy." Their average price target around $250 would imply more than 50% upside from Wednesday's levels.

Even with today's gains, Oracle shares are still down about 13% since the start of the year and 50% from September's record highs.

Inflation stayed steady, at least before the war in Iran.
Credit: David L. Ryan / The Boston Globe via Getty Images

Key Takeaways

• The Consumer Price Index rose 2.4% over 12 months ending in February, the same inflation rate as January and matching forecaster expectations.
• The measurement did not show the effect of the Iran war, which sent gasoline prices soaring as oil supplies were disrupted.
• Inflation has run above the Federal Reserve's goal of a 2% annual rate since 2021.

A key measure of inflation stayed steady in February before the war in Iran sent gas prices soaring.

The cost of living as measured by the Consumer Price Index rose 2.4% over 12 months in February, the Bureau of Labor Statistics said Wednesday. That was the same annual increase as in January and matched forecasts from a survey of economists by Dow Jones Newswires and The Wall Street Journal. "Core" prices, excluding the volatile categories of food and energy, rose 2.5% over the year, also the same as the previous month and in line with expectations.

The report showed inflation's trajectory remained steady ahead of the war in Iran, which has driven national average gasoline prices up by more than 50 cents a gallon over the last two weeks. Fighting has disrupted shipping from the oil-producing region.

What This Means For The Economy

Inflation remained in its recent pattern, staying stubbornly above the Fed's 2% goal but not surging out of control—but the Iran war has shaken up the outlook.

"We should think of this as an inflation floor for the coming months, not a sign of what’s to come," Jake Krimmel, senior economist at Realtor.com, wrote in a commentary. "Today’s report establishes the cleanest baseline we are likely to see before new price pressures form and grow this spring."

Inflation has stubbornly remained above the Federal Reserve's 2% annual target as tariffs have pushed up prices for some goods, even as housing inflation has cooled. Inflation surged in late 2021 as the economy reopened from COVID-19 restrictions and has yet to cool down to pre-pandemic levels.

Tariff-sensitive categories rose, including apparel, which went up 1.3% over the month, and household furnishings, which rose 0.3%. Groceries rose 0.4%, while dining out rose 0.3%.

The deceleration of housing inflation continued, with shelter prices only rising 0.2% over the month, the same as in January, and rent rising 0.1%, the lowest monthly increase since January 2021.

Going forward, the inflation outlook depends on how long the Iran war lasts, and especially whether shipping resumes through the Strait of Hormuz. An estimated 20% of the world's oil supply travels through the narrow channel, which has been virtually closed because of the threat of Iranian attacks on ships. Not only is gas a major item in household budgets, but higher fuel costs can also push up prices for other goods and services, since most economic activities rely on motor vehicles.

What Does This Mean For the Fed?

The relatively tame inflation report is unlikely to convince Federal Reserve officials to lower interest rates in the coming months, economists said.

Fed officials are instead likely to keep the central bank's key interest rate higher for longer as they wait to see how the war affects prices. The fed funds rate affects borrowing costs across all kinds of loans, and Fed officials have kept it elevated since 2022 to discourage borrowing and spending and quell inflation. The Fed cut rates late last year to help boost the faltering job market, but has remained in "wait-and-see" mode since its last meeting in January.

The uncertainty of the Iran war is likely to discourage the Fed from making any moves anytime soon, economists said.

"The February consumer price index is unlikely to move the needle on the outlook for monetary policy, as it's only just a snapshot of prices immediately before the U.S./Israel-Iran war, which will lead to much stronger headline inflation in March," Bernard Yaros, lead US economist at Oxford Economics, wrote in a commentary.

Update, March 11, 2026—This story has been updated with additional detail from the CPI report and commentary from economists.