Evidence suggests that inflation is relatively widespread, job creation has weakened, the Fed will likely hold the policy rate steady.

Inflation ticked down in January, the latest data released Friday from the Bureau of Economic Analysis shows. But it still remains well above the Federal Reserve’s target. The Personal Consumption Expenditures Price Index (PCEPI), which is the Fed’s preferred measure of inflation, grew at an annualized rate of 3.4 percent in January 2026, down from 4.4 percent in the last month of 2025. The PCEPI grew at an annualized rate of 3.5 percent over the prior three months and 2.8 percent over the prior year.

Core inflation, which excludes volatile food and energy prices, remained elevated. Core PCEPI grew at an annualized rate of 4.5 percent in January 2026. It grew at an annualized rate of 3.7 percent over the prior three months and 3.1 percent over the prior year.

• Breaking It Down
• Competing Objectives
• What Should Be Done?

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