Americans finally received some good news in the form of cooling inflation earlier this month. But the Federal Reserve’s preferred inflation gauge is set to reverse that trend with the latest data release on Friday. 

Earlier in the month, the latest data from the Consumer Price Index and Producer Price Index provided Americans some relief that overall consumer and wholesale pricing pressures eased in February. But under the hood, factors from both indexes that the Bureau of Economic Analysis uses to calculate the Personal Consumption Expenditures Price Index point to a firmer February print for the Fed’s preferred measure. 

The bureau is scheduled to release the latest PCE inflation data on Friday at 8:30 a.m. Eastern. Economists surveyed by FactSet expect total PCE inflation rose 0.3% in February and held steady at 2.5% from a year earlier. That would be the same monthly and annual growth rate logged in January. 

Fed Chair Jerome Powell noted during his March 19 press conference that based on the Consumer Price Index and other data, he was also estimating that total PCE prices rose 2.5% year over year in February. 

Yet February’s core PCE inflation—which excludes the more-volatile food and energy costs and can be a better indicator of growth trends—is expected to show an uptick. Core PCE inflation is expected to measure 2.7% for February, according to FactSet. Interestingly, Powell estimated the core print for February would be up 2.8% from a year ago. If so, that would be in line with the median projection for total PCE inflation of 2.7% this year, according to policymakers’ latest Summary of Economic Projections.

The consensus estimate from economists is for monthly core price growth to rise by 0.3% to February from January, the same monthly pace logged at the start of the year.

The stickier expected PCE inflation print is due, in large part, to a pickup in goods prices. Additionally, strengthening in healthcare and financial-services prices is expected to add pressure to this February’s PCE reading.

Powell acknowledged last week that he doesn’t anticipate there will be much progress in cooling inflation back to the Fed’s 2% target this year and the latest SEP forecasts do not have the central bank achieving its goal until 2027.

Heading into this year, the U.S. had steady economic growth, robust financial-market returns, and solid labor conditions—but inflation remained above-target. So while the Fed may have a little leeway on the maximum employment side of its dual mandate, there’s “no margin of error” on the steady price-growth directive, Cetera chief investment officer Gene Goldman said this week. 

So if inflation did tick up in February, Goldman sees that possibly forcing Fed officials to pull back on plans to further lower interest rates this year. So far, policymakers have a median estimate of two cuts on the agenda for the year, likely in the back half of the calendar.

Already, Atlanta Fed President Raphael Bostic said Monday that he’s only expecting the Fed to implement one interest-rate cut this year, saying that he’s expecting a very bumpy path for inflation this year, which could be exacerbated by tariff hikes.

St. Louis Fed President Alberto Musalem also noted Wednesday that he’s carefully watching the impact of tariffs, warning that the secondary impacts of higher tariffs, as well as retaliatory actions, could drive more-persistent inflation.