The Fed Remains Vigilant, Energy Inflation Risks in the Spotlight
The Federal Reserve remains cautious regarding the direction of US inflation. Although the February 2026 CPI data showed moderate inflation, with a headline CPI of 2.4% and a core CPI of 2.5%, the US central bank is not only looking at the CPI but also focusing more on the PCE, the Fed's official benchmark inflation measure. Official data also indicates that the next PCE report is scheduled for March 13, 2026, so the market is still waiting for confirmation of whether the weakening inflation trend is indeed continuing.
At the same time, the geopolitical situation and rising energy prices are making the Fed more cautious. Reuters reports that the surge in gasoline prices due to the war has contributed to the February CPI, while economists assess that the next risk comes from energy prices, which could spread to the prices of other goods and services. Therefore, although core inflation appears to be slowing on a monthly basis, the Fed is unlikely to rush into changing its policy direction.
For now, the most plausible scenario is for the Fed to hold interest rates for the near term while awaiting further data, particularly PCE and energy price developments. The Fed's official schedule indicates the next FOMC meetings will take place on March 17–18, 2026, and April 28–29, 2026. It's also worth noting that the current Fed Chair is still Jerome Powell, not Kevin Warsh; so views on interest rate cuts under the new Chair should be read as speculation or analyst views, not current conditions.
As a result, the US economy is receiving signals that inflation hasn't worsened, but isn't yet secure enough to pave the way for rapid interest rate cuts. For the US dollar, the Fed's wait-and-see stance tends to keep it strong, or at least prevent it from weakening easily. Meanwhile, for gold, this could be a pressure point because prolonged high interest rates, a stable dollar, and inflation-fueling energy risks typically limit the precious metal's upside. Therefore, the market currently views the Fed as remaining cautious: not yet panicking about inflation, but also not yet confident enough to immediately ease policy. (Cp)
Source: Newsmaker.id
