President Joe Biden is standing by his prediction that the Federal Reserve will enact an interest rate cut before the end of the year. The President doubled down on the rate cut prediction despite a Consumer Price Index (CPI) print released on Wednesday suggesting that inflation was reaccelerating.

Federal Reserve officials thought inflation was still receding, though that process was expected to be "somewhat uneven," according to minutes released on Wednesday from the Fed's policy meeting last month.

Why it matters: That characterization came before new data that showed yet another month of hotter-than-expected inflation — a sign that faster price increases in key parts of the economy will take longer than anticipated.

The Federal Reserve on Wednesday held interest rates steady as expected and signaled it still plans multiple cuts before the end of the year.

Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%, where it has held since July 2023.

Rising gasoline costs kept inflation elevated in February, underscoring that a return to more modest consumer price increases following a pandemic-induced spike may continue to be bumpy.

The climb in fuel costs and rent offset flat food prices.

Overall prices rose 3.2% from a year earlier, up from 3.1% in January, according to the Labor Department’s consumer price index. On a monthly basis, costs increased 0.4% following a 0.3% gain the previous month.

What is the core inflation rate right now?

Inflation rose again in February, keeping the Federal Reserve on course to wait at least until the summer before starting to lower interest rates.

The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus.

Inflation unexpectedly ticked higher in February thanks to a jump in the cost of gasoline and rent, underscoring the challenge of taming price pressures within the economy.

The Labor Department said Tuesday that the consumer price index, a broad measure of the price of everyday goods including gasoline, groceries and rent, rose 0.4% in February from the previous month. Prices climbed 3.2% from the same time last year. 

Both of those figures came in higher than the 0.3% monthly increase and 3.1% headline gain recorded in January.

Federal Reserve Chairman Jerome Powell headed to Washington this week to give his semi-annual monetary policy report to Congress. Since March 2022, Powell has been battling the rise of inflation with interest rate hikes, but with consumer price increases slowing, it’s an understatement to say that Wall Street has been waiting for a policy shift. The stock market is booming to such an extent, having priced in falling inflation and multiple rate cuts, that critics are openly debating whether it’s hit bubble territory.