• Cooler-than-anticipated inflation is a relief, but it is unlikely the effect of tariffs has yet materialized in the data released Wednesday, according to economists. That hasn’t stopped the Trump administration from taking a victory lap, though.

For all the talk of tariffs and trade wars, inflation cooled in February by more than anticipated. Consumer prices rose 2.8% from a year earlier, government data released Wednesday revealed. But economists warn it could be too early for President Donald Trump’s tariffs to affect prices and for the Federal Reserve to cut interest rates.

“Today’s cooler-than-expected [Consumer Price Index] reading was a breath of fresh air, but no one should expect the Fed to start cutting rates immediately,” Ellen Zentner, Morgan Stanley Wealth Management’s chief economic strategist, said in a statement to Fortune. “The Fed has adopted a wait-and-see posture, and given the uncertainty of how trade and immigration policy will impact the economy, they’re going to want to see more than one month of friendly inflation data.”

Sam Williamson, a senior economist for First American Financial Corporation, appeared to agree that the latest inflation numbers are an encouraging sign for the central bank but not enough to call for a March interest-rate cut. Plus, the Fed has something to watch out for: tariffs.

“The impact of new tariffs likely hasn’t materialized yet, leaving uncertainty around inflation as we approach spring, supporting the Fed’s cautious approach in the coming months,” Williamson said in a statement.

Back in June 2022, inflation reached 9.1%, a four-decade high. The central bank tightened its monetary policy to tame scorching hot inflation, and only entered its loosening cycle in September 2024. The Fed and its chair, Jerome Powell, have since signaled a more cautious approach to monetary policy. Still, prices are no longer increasing as rapidly, and inflation is closer to the central bank’s 2% target, where it considers prices to be stable. But in January, Trump claimed that “inflation is back.” That month, consumer prices rose 3% from a year earlier, hotter than expected.

Trump claimed he had nothing to do with inflation at the time. But his press secretary, Karoline Leavitt, chimed in on the latest inflation data on Wednesday.

“Today’s CPI report shows inflation is declining and the economy is moving in the right direction under President Trump,” she wrote on X. Leavitt went on to claim Trump is “driving down costs” and the administration would continue to focus on fixing the “economic and inflation nightmare” left by the prior administration.

Still, it might be too soon to declare victory over inflation or assume we’re out of the proverbial woods while there is uncertainty surrounding tariffs, whether it be via pauses, brand-new threats, or actual impositions. Regardless of tariff unpredictability, the consensus among economists is that American companies—when forced to pay tariffs—pass those costs on to consumers.

“The dizzying back-and-forth over tariffs is a large and unpredictable upside risk to the inflation outlook,” Bill Adams, chief economist at Comerica Bank, said in a statement. “The policy changes day to day and minute to minute, but the high-level takeaway is that tariff rates look likely to be higher in the second half of 2025 than they were in the first.”

Higher tariffs increase the cost of imported consumer goods and input costs for businesses that provide services, he explained.

Adams called tariffs “an unpredictable wild card.”