Inflation remains sticky, but some market watchers believe it isn’t enough to derail the Federal Reserve’s rate-cutting plans this year.

The Consumer Price Index (CPI) showed that prices grew 0.4% in February, above expectations and accelerating from January’s 0.3% monthly increase and 3.1% annual gain.

On a “core” basis, prices increased 0.4% in February and 3.8% over the previous year. Some Fed watchers believe a June cut is still possible if inflation gradually falls from its 2022 highs.

A drop in June is more likely if the central bank decides to begin easing monetary policy.

If the labor situation and consumer spending decline, June seems like a reasonable time to expect a first cut.

However, if that does not happen, rate cut expectations may be pushed back even more, and there is still a risk that no rate cuts will occur this year.

Investors are wagering that the Fed will hold steady at its meetings next week and in May before making its first cut in June.