2025-03-12T12:32:10Z Read in app New consumer price index data showed what inflation looked like in February. Brandon Bell/Getty Images This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now.Have an account? Inflation cooled more than expected in February.The consumer price index rose 2.8% year over year, under the expected 2.9% rate.Traders think the Federal Reserve will hold interest rates steady next week.Inflation slowed more than expected last month.The consumer price index, an inflation measure, increased 2.8% year-over-year in February. That's under the forecast of 2.9% and January's rate of 3%.It's a reversal after four consecutive months of inflation heating up and is a step toward the Fed's target."The path to sustainably returning inflation to our target has been bumpy, and we expect that to continue," Federal Reserve chair Jerome Powell said on Friday at the University of Chicago Booth School of Business 2025 US Monetary Policy Forum.The index rose 0.2% over the month from January to February. That's below the expected 0.3% and the previous 0.5%One of President Donald Trump's priorities in his second term has been trade, with several rounds of threatening or imposing new tariffs on countries like China, Canada, and Mexico. Economists fear that those could raise prices for US consumers, threatening higher inflation in coming months."The focus by the president on tariffs risks reigniting inflation which would be most unfortunate given the progress which has been seen over the past couple of years," Mark Hamrick, Bankrate's senior economic analyst, previously said in a statement to Business Insider.The Federal Open Market Committee will meet next week to decide whether to change interest rates. Members will likely consider the new consumer price index data and recently published employment figures in their decision-making process. While unemployment has slowly ticked up over the past couple of years, it was still historically low in February, data published Friday showed. Job growth was below expectations in February, and the prime-age labor force participation rate was steady.Cory Stahle, an economist at the Indeed Hiring Lab, told BI on Friday that the Fed will probably still think the labor market is robust and have time to make rate adjustments. However, job cuts happening in the public sector, tariffs' potential impacts on businesses, and other changes could have an effect.Stahle said the Fed may feel "like their time is running out given how quick a lot of these changes are happening."CME FedWatch, which estimates predictions for Fed interest rates based on market activity, showed traders expect a 97% chance the Fed will hold rates steady later this month.This is a developing story. Please check back for updates.