Housing prices have risen in perpetuity for decades, and the past few years have been particularly painful for prospective buyers—so much so that the sky-high costs of owning a home make for regular headlines in everyday media.

So it probably goes without saying (though we'll say it anyways) that Americans are in desperate need of ideas that would lower their burden and make housing more accessible to more than just the ultra-rich.

And very recently, a new contender entered the arena:

The 50-year mortgage.

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First-Time Homebuyer Data Gets Uglier

As I just said, there's nothing new about Americans' struggles to find affordable housing, but a pair of recent data points from the National Association of Realtors (NAR) really drive the message home. In early November, the NAR reported that:

• The share of first-time homebuyers fell to an all-time low of just 21% of all homebuyers.
• The typical age of first-time homebuyers climbed to an all-time high of 40 years.

Put differently? An increasing majority of homebuyers are those who have already purchased at least one home—and thus have an asset they can sell to put toward the purchase of a new home.

Young and the Invested Tip: Selling a home is like selling many other assets in that you'll likely owe capital gains taxes. Here's what you need to know about this kind of tax.

Meanwhile, the minority share of first-time homebuyers is becoming increasingly older, implying that Americans must save for longer than ever before to be able to afford taking the dive into homeownership—and it's doing so pretty rapidly. The median age of first-time buyers, now at 40 years old, was 38 last year, and 33 just five years ago.

The troubling but unsurprising acceleration aligns pretty much perfectly with an explosion in the two most core components of purchasing a home: home prices ...

... and mortgage rates:

Theoretical fixes typically have to do with America's housing deficit, which hit an all-time high 4.7 million homes in July despite a pick-up in construction.

Recently, President Donald Trump floated a fix that would approach the crisis from a different angle: financing.

Specifically, he proposed a new 50-year mortgage plan.

Of course, that's about as specific as the proposal got.

Source: Truth Social

Adding a whiff of legitimacy was U.S. Director of Federal Housing Bill Pulte, who said on X (formerly Twitter) that "we are indeed working on The 50 year Mortgage - a complete game changer."

Whether this idea will have any legs remains to be seen, but the initial reaction among economists, analysts, and other experts is … well, skeptical.

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Can a 50-Year Mortgage Really Help?

On its face, the logic seems pretty straightforward: Spreading out the same home price over a larger number of monthly payments would reduce the size of those monthly payments.

"From a simple affordability perspective, we estimate that a 50-year mortgage product (with a 50bps higher rate) could lower the monthly payment on a median priced home (~$420K, assuming a 12% down payment) by roughly -$119 or increase an average consumer's buying power by almost $23k, relative to a 30-year mortgage," says a team of UBS analysts led by John Lovallo.

The problem, of course, is you're not just extending the loan principal across 20 more years—you're also stretching out the interest payments. 

And as Lovallo and others point out, that small improvement in month-to-month affordability would come at a significant cost.

"Extending the term reduces the monthly cost, but it dramatically increases the amount of interest a borrower pays over time," Jose Pascual, Head of Mortgage & Commercial Banking, PSECU, a Pennsylvania-based credit union. "On a $500,000 loan at current rates, the interest paid on a 50-year mortgage would more than double the overall cost of the loan."

Young and the Invested Tip: Many Baby Boomers are reluctant to sell off their current home for a smaller one. Here are a few of the reasons why.

And again, that's assuming current rates.

"The interest rate would most likely be higher than a 30-year mortgage," says Carolyn Morganbesser, Associate Vice President of Mortgage Originations at Affinity Federal Credit Union, who added that a 50-year mortgage "is not a necessary lending option, but it would depend on the borrower."

Why would interest rates be higher? Well, for one, longer maturities mean lenders are taking on more risk, which they offset by charging a greater rate.

But Lovallo adds that the Dodd-Frank Act would have to be amended to classify 50-year mortgages as qualifying loans. Failure to do so could result in the mortgages carrying even higher interest rates than what the longer maturity alone would demand.

There's also the downside of slower amortization (paying down the loan). Pascual notes that by the time a homeowner could pay off a 30-year mortgage, the borrower of a 50-year loan would have paid down just 26% of their original balance—limited progress that doesn't really benefit the borrower.

And all of that assumes the homebuyer is even still alive to make all of those payments.

"Other potential complicating factors include the fact that the average first-time buyer is 40 years old (overall average buyer is 59) and therefore could be deceased before a 50-year mortgage matures," Lovallo says.

In many ways, the math simply isn't mathing—at least not in a way that provides a net benefit to would-be homebuyers.

"There's nothing wrong with creative repayment structures when they truly improve affordability, but consumers should be careful not to substitute lower payments for long-term financial stability," says Mike Petrakis, CEO of lender PowerPay. "A 50-year mortgage might work for a narrow group of borrowers, but it shouldn't become the default solution for the pressure buyers are feeling in an already competitive housing market."

Never say never, of course—Year 1 of Trump Part 2 has been nothing but proof that we should expect the financially unexpected.

But when even the Treasury is throwing cold water on an idea, we probably shouldn't hold our breath.

"That was one proposal," Joe Lavorgna, a counselor to Treasury Secretary Scott Bessent, said during an appearance on NewsNation's The Hill. "The feedback has been such that probably—and it did not come from Treasury—but probably not an optimal approach."

Disclaimer: This article does not constitute individualized investment advice. These securities appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

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However, the average tax refund for the year fell well short of the administration's lofty projection—but they were indeed higher than last year. Tax law changes made by the "One Big Beautiful Bill" (OBBB) are primarily responsible for the uptick. But that doesn't necessarily mean you received a big refund (or smaller tax bill).

If you're wondering how your refund compares to others, read on to see how high the average tax refund actually climbed in 2026. We'll also explore why refunds rose, who was expected to get a bigger refund, how long it typically takes to get paid, and what steps you should take if you do get a substantial refund.

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What's the Average Tax Refund So Far in 2026?

As of April 17, 2026 (two days after tax returns were due), the IRS processed over 138 million tax returns and issued over 90 million refunds.

For all the refunds issued so far, the average amount is $3,275, which is $333 (or 11.3%) higher than the average refund at the same point during last year's tax season (which was $2,942).

This is a far cry from the expected extra $1,000 that I mentioned earlier. So, while refunds are higher, they're not as large as originally expected.

Why Are Tax Refunds Expected to be Higher This Year?

Generally speaking, you get a tax refund from the IRS when the federal income taxes you paid during the year through paycheck withholding and/or estimated taxes are greater than the taxes you owe for the year (as reported on your tax return).

So, for example, if too much tax is withheld from your income, or your tax bill is cut, you could end up with a larger tax refund … and the OBBB, which was enacted in July 2025, made both of these things possible for millions of Americans.

First, the OBBB created four new tax deductions and expanded several other tax breaks for the 2025 tax year. These changes will reduce the amount of tax owed for qualifying taxpayers. Among other things, the legislation enhanced or added the:

• Child tax credit (increased from $2,000 to $2,200 per eligible child)
• Standard deduction (increased it by 5%)
• State and local taxes (SALT) deduction (increased the maximum deduction from $10,000 to $40,000)
• Senior deduction (added new deduction)
• Tip deduction (added new deduction)
• Overtime deduction (added new deduction)
• Car loan interest deduction (added new deduction)

Second, after these changes were made, the IRS didn't adjust the 2025 withholding tables used by employers to calculate the amount of federal income tax to withhold from their employees' paychecks. As a result, for people who can benefit from the new or improved tax breaks listed above, their withholding wasn't reduced by a corresponding amount. This caused over-withholding for many people in 2025.

Likewise, the estimated tax payment rules weren't adjusted after the OBBB's passage. So, self-employed people and other taxpayers who made estimated payments for the 2025 tax year may have also paid more tax in advance than necessary.

So, again, if you took advantage of any of the OBBB changes, and your 2025 withholding or estimated tax payments stayed the same, this likely either:

• Triggered a tax refund
• Boosted the tax refund you would have otherwise received
• Cut the tax bill you would have otherwise had to pay when you filed your return

Which outcome applies depends on all the factors that make up your overall tax situation.

Related: Tax Prep Checklist [Get Ready to File Your 2025 Tax Return]

Who Could Get a Bigger Refund This Year?

Millions of people could potentially receive a larger tax refund this year because of the new or enhanced tax breaks enacted by the OBBB. For instance, the following taxpayers might get a larger refund under the OBBB:

Families with children: The increased child tax credit will put more money in your pocket. Since the credit is worth $2,200 per eligible child, families with more than one child will qualify for a larger overall credit. Plus, some of the credit may be "refundable," which means a portion of the credit will be paid back to you even if you owe no or little tax.

Seniors who are at least 65 years old: The new senior deduction is worth up to $6,000 per eligible person. If you're married and both you and your spouse were at least 65 years old at the end of 2025, your combined deduction could be as much as $12,000. However, if your income is too high, your deduction is reduced (potentially to $0).

Residents in high-tax states: If you pay a lot of state and/or local income, sales, or property taxes, you might be able to deduct an additional $30,000 of those taxes on your federal income tax return. That's because the SALT deduction cap was raised from $10,000 to $40,000 (although the cap can drop back down to $10,000 if your income is above a certain threshold). Note that you have to itemize in order to claim the SALT deduction (so you can't claim the standard deduction), and you have to choose between deduction state and local income taxes or sales taxes (you can't deduct both).

Workers who receive tips or earn overtime pay: New tax deductions for tip income and overtime pay will help a lot of workers. However, not all tips or overtime pay are deductible, and various restrictions apply. For instance, you can only deduct the first $25,000 of qualified tips received during the year, or the first $12,500 of overtime pay earned during the year (up to $25,000 for joint filers). These deductions are also gradually phased-out if your income is above a certain amount.

Non-itemizers: If you take the standard deduction instead of claiming itemized deductions on Schedule A (you can't claim both), you'll benefit from the OBBB's increased "regular" standard deduction amount for 2025. Since close to 90% of all taxpayers claim the standard deduction, the 5% increase will help a lot of people. Plus, if you're 65 or older, or blind, you can take an "additional" standard deduction of either $1,600 or $2,000, depending on your filing status. If you're both 65+ and blind, you can double the additional amount.

New-car owners: If you took out a loan in 2025 to buy a new car that was assembled in the U.S., you may be able to deduct up to $10,000 of interest you paid last year on the loan. However, this deduction is also gradually reduced (or completely eliminated) if your income is too high. You can find out if your car was assembled in the U.S. by checking the car's "window sticker" or entering its VIN in the National Highway Traffic Safety Administration's online VIN Decoder.

Related: How Is Retirement Income Taxed?

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How Quickly Will Your Tax Refund Arrive?

The IRS seems very proud of the fact that they typically process your return and issue a refund within 21 days if you file electronically. However, if you file a paper return, it can take six weeks or longer from the date they receive your return to send a refund payment. So, there's lesson No. 1 if you want your refund sooner: E-file your tax return!

However, there are a number of reasons why your refund could be delayed (even if you e-file). For instance, it could be held up for:

• Mistakes on your return (e.g., math errors or missing income)
• Incomplete returns (e.g., missing forms or forgetting to sign your return)
• Identity theft or fraud (e.g., someone filed a return using your name and Social Security number)
• Injured spouse relief (if you file Form 8379 to request relief, the IRS has to manually process your case)

Also note that the IRS is phasing out the use of paper refund checks. They will only mail you a paper check in rare cases. So, that means most people will get their refund payment via direct deposit into your bank account. But the good news is that direct deposit is a much faster way to get your money!

Related: 11 Ways to Avoid Taxes on Social Security Benefits

Want to Avoid a Large Refund Next Year?

You might be thinking: "Why would I want to avoid a big refund next year!?" Fair question.

I understand the excitement when the IRS drops a big refund payment into your bank account. But a tax refund basically means you gave Uncle Sam an interest-free loan. For workers, the extra taxes withheld from each paycheck, which generated your refund, could have been earning interest in your bank account during the year, instead of in the government's account.

It's generally best if the amount of federal income tax withheld from your paychecks during the year comes close to the amount of tax you'll owe for the year. That way, you'll either get a small refund or only pay a small amount when you file your return.

To reach that balance, workers can submit a new W-4 form with their employer. Your employer will then use the new form to reset your income tax withholding. Plus, the IRS recently updated the W-4 form to account for the OBBB changes. So, if you receive a big refund this year because of the new or improved tax breaks from the OBBB, completing a new W-4 form should help correct your withholding for 2026.

For more information, see When and How to Adjust Your Tax Withholding.

Copyright © 2026 by Rocky Mengle. All rights reserved. Used with permission.

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But across much of the U.S., that floor is even higher.

More than half of all states have a state-level minimum wage that exceeds the federal minimum, in some cases by quite a bit. And in various pockets around the country, cities have established their own minimum wages that even exceed the higher bar their state has set.

Today, I'll show you the cities with the highest minimum wages in the nation. Indeed, even at the bottom of this list, these cities' minimums are more than double the current federal standard.

What Is the Federal Minimum Wage?

The federal minimum wage for covered nonexempt workers is $7.25 per hour. But with the federal minimum wage mired at that same rate since 2009, some states and cities have enacted their own minimum wage requirements.

In the event there are different local, state, and federal minimum wages that all apply to the same employee, the highest rate is the one that must be paid.

Cities With the Highest Minimum Wages

Using data from the Economic Policy Institute, I've compiled a list of the U.S. cities with the highest minimum wages.

The cities with the highest minimum wages don't just beat out the federal minimum wage incrementally—every city on this list requires employers to pay more than double the federal minimum.

Understandably, many of the cities boasting the nation's highest minimum wage requirements also happen to have high costs of living. Regardless, even the lowest-paid workers in each of these cities make more than double the federal minimum wage.

#12 (tie): Cupertino + Los Altos + Santa Clara + Palo Alto, California

Cupertino, located in California's Silicon Valley, is known for being the home of Apple's headquarters. Nearby Los Altos, on the western edge of Silicon Valley, houses many of the area's workers; though it has more than 30,000 residents, people still describe the city as having a small village atmosphere. Santa Clara, in the center of Silicon Valley, is home to the headquarters of some of the world's largest chipmakers, including Nvidia, Intel, and Advanced Micro Devices. (And a fun fact: Santa Clara University is the oldest university in the state.) Palo Alto is known as the "Birthplace of Silicon Valley." It's home to numerous technology companies, including HP, VMware, and Google's Nest Labs—but, despite the name, not Palo Alto Networks, which is HQ'd in Santa Clara.

Cupertino, Los Altos, Santa Clara, and Palo Alto are all less than a half an hour's drive from one another, so it isn't surprising that they will all have the same minimum wage in 2025: $18.20 per hour. That's a big step above the upcoming 2025 California state minimum wage of $16.50 per hour.

Cupertino, Los Altos, and Palo Alto enacted their own minimum wages in 2016, and Santa Clara established its minimum wage in 2017. All three will increase their minimum wages to the upcoming rate at the beginning of 2025.

Related: The 7 Best Dividend ETFs [Get Income + Diversify]

#11: El Cerrito, California

El Cerrito, which translates to "the little hill" in Spanish, has a total area of just 3.7 square miles. From this hilly area, residents and visitors can see parts of San Francisco, including the Golden Gate Bridge. Its southern reaches are less than 500 feet from the outskirts of Berkeley and just a few miles from the University of California, Berkeley campus.

This town enacted its own minimum wage in 2015. Thanks to the most recent bump, made at the beginning of 2025, minimum wage workers in El Cerrito now make $18.34 per hour.

Related: 7 Best Wealth + Net Worth Tracker Apps [View All Your Assets]

#9 (tie): Berkeley + San Francisco, California

Berkeley is perhaps best known for the acclaimed University of California, Berkeley, as well as the university-operated Lawrence Berkeley National Laboratory. The city also has the Graduate Theological Union, which is one of the largest religious study institutions around the globe.

Most people are familiar with at least a couple of San Francisco's most noteworthy claims: the Golden Gate Bridge, Alcatraz, the "Painted Ladies" Victorian houses, great sourdough bread. And if you're a fellow Millennial and would like to reminisce with me, it's also where the characters of the show Full House lived.

As Berkeley and San Francisco are both high-cost-of-living cities, it's no surprise that they also have higher minimum wages than most of the country. Both cities made local minimum wage increases on July 1, 2024, which brought their minimum rates up to $18.67 per hour.

Related: 7 Best High-Dividend ETFs for Income-Minded Investors

#8: Denver, Colorado

You're probably wondering by now whether every city on this list is located in California. Not so! Colorado's capital city has a high minimum wage that matches its altitude! Denver is known for being nestled in the foothills of the Rocky Mountains, hence its nickname, "The Mile-High City." It's best known for Coors Field, the Red Rocks Amphitheatre, and the Denver Art Museum, among other attractions.

Denver enacted its own minimum wage in 2019, and its most recent increase—effective as of the start of 2025—ensures that even its lowest-paid hourly workers enjoy a rate of $18.81 per hour. That's not just a higher minimum wage than the federal standard—it's considerably better than even Colorado, which provides one of the 10 highest state minimum wages.

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#7: Sunnyvale, California

Sunnyvale is another city in the Bay Area chock full of tech names, including LinkedIn, Armorblox, Fortinet, and med-tech name Intuitive Surgical, which makes robotic surgical systems. (It's also where Atari was founded.) And many of the city's residents who don't work for Sunnyvale companies tend to commute to work for Apple, Google, Lockheed Martin Space, Amazon, and more.

Sunnyvale, like many other California cities, makes minimum-wage adjustments every year. Its latest update, effective as of Jan. 1, 2025, was a bump from $18.55 per hour to $19.00 per hour.

Related: 9 Best Fidelity ETFs for 2025 [Invest Tactically]

#6: Emeryville, California

Emeryville is a town on the San Francisco Bay. It's home to Pixar Animation Studios—fun fact: nearly all Pixar films feature Emeryville in some small way—Peet's Coffee & Tea, Clif Bar, and LeapFrog.

The town enacted its own minimum wage in 2015. Emeryville's most recent increase became effective on July 1, 2024, bringing the minimum wage to $19.36 per hour.

Related: 12 Best Apps That Give You Money for Signing Up [Free Money]

#5: Mountain View, California

Mountain View is another Silicon Valley city—headquarters to not just a slew of technology giants including Google and Intuit, but also the home of Microsoft's Silicon Valley HQ. Among points of interest in the city are Shoreline Park, the Computer History Museum, and the Shoreline Amphitheater.

The city established its minimum wage law in 2015. Its most recent increase, effective Jan. 1, 2025, will raise the current minimum wage to $19.20 per hour, up from $18.75 per hour in 2024.

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#4: SeaTac, Washington

While this list is just loaded with California names, the top cities for high minimum wages all belong to Washington—which offers up the highest minimum wage for any state, at $16.28 per hour.

I'll start with SeaTac, which is a portmanteau of Seattle and Tacoma. This area includes the communities of Angle Lake, Bow Lake, McMicken Heights, and Riverton Heights. SeaTac is home to the Seattle-Tacoma International Airport and is the headquarters for Alaska Airlines and Horizon Air. Roughly 80 of the city's businesses are Fortune 1000 companies.

SeaTac's minimum wage, which was bumped from $19.71 per hour to $20.17 per hour on Jan. 1, 2025, increases every year based on inflation. But there's a big caveat: It doesn't apply to all workers making minimum wage—it only applies to hospitality and transportation workers.

Related: 10 Monthly Dividend Stocks for Frequent, Regular Income

#3: Seattle, Washington

Many of the cities with the highest minimum wages are home to giant tech firms, and Seattle is no exception, hosting Amazon's headquarters. But it's also home to Starbucks, it's where Boeing got its start, and it's just a hop, skip, and a jump away from other massive HQs, including Microsoft's and Costco's home bases. On top of that, Seattle is known for the Space Needle, Pike Place Market, Frasier, and being the birthplace of grunge.

This seaport city enacted its own minimum wage back in 2014, and it will soon increase that wage on Jan. 1, 2025, to $20.76 per hour, up from $19.97 per hour in 2024. But again, there's an asterisk: Smaller employers (with 500 or fewer employees) only have to pay $17.25 per hour if covered employees receive tips, or if employer contributions toward their medical benefits are equivalent to at least $2.72 per hour.

Related: How Are Social Security Benefits Taxed?

#2: West Hollywood, California

Trendy, progressive West Hollywood is a city within Los Angeles County. It's home to the Sunset Strip, which is well-known for its restaurants, shops, and vibrant nightlife. And visitors going celebrity-watching can sometimes find the stars at some of West Hollywood's more upscale locales.

While hourly paid workers almost certainly don't make as much as those celebrities, they do earn some of the higher minimum wages around. The most recent minimum wage increase in West Hollywood went into effect on July 1, 2024, raising the bar to $20.86 per hour.

Related: 50+ Best Money-Making Apps That Pay You Real Money

#1: Tukwila, Washington

Tukwila, located south of Seattle, boasts a diversity of cultures—the city claims more than 80 languages are spoken in the area, and unsurprisingly, residents also get to enjoy a wide range of cuisines. Top employers include Sound Health, Boeing Employees Credit Union, Boeing Company, and Prime Now LLC.

Tukwila also is home to the highest city-level minimum wage in the country. The city enacted its own minimum wage in 2022. The most recent increase, which became effective at the beginning of 2024, puts the current minimum rate at $20.29 per hour, but this rate will rise to $21.20 per hour on July 1, 2025.

But like with Washington's other city-level minimum wages, Tukwila's minimum isn't applicable across the board—it only applies for large employers (those with 500 or more employees). Employers with between 15 and 499 employees have a separate minimum wage of $18.29 per hour. And employers with fewer than 15 employees that also earn less than $2 million in annual revenue default to the state minimum wage.

Related: The 10 Best Vanguard ETFs for 2025 [Build a Low-Cost Portfolio]

Related: The 10 Best-Rated Dividend Aristocrats Right Now

Dividend growth puts more cash in our pockets and signals that the company we're invested in is confident in its ability to keep churning out profits. And there's no more heralded group of dividend growers than the Dividend Aristocrats, which are companies that have paid higher cash distributions each year for at least a quarter-century.

But even Aristocrats aren't created equally. Check out which dividend growers Wall Street loves the best right now in our list of the top-rated Dividend Aristocrats.

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“Reading too far into today’s CPI in most respects amounts to arguing over the dinner menu on the Titanic, since the economy has struck an energy cost iceberg," says Brad Conger, Chief Investment Officer at investment firm Hirtle Callaghan.

The U.S. Bureau of Labor Statistics said Wednesday that February's CPI, which measures the change in prices on a variety of consumer goods and services, rose by a seasonally adjusted 0.3% month-over-month—a hair faster than in January (0.2%) but on par with consensus expectations. That put consumer prices 2.4% higher year-over-year, which also matched economists' expectations and was level with January's CPI growth.

"Core" CPI—a measure of inflation that excludes food and energy costs (factors that are more volatile than the other prices tracked by the Labor Department)—remained steady, too. Core CPI for February was just 0.2% higher month-over-month, which was the same as January and December and right where economists expected. On a year-over-year basis, the core CPI rate of 2.4% was a touch softer than projections for 2.5% growth.

Here's a quick look at February's key CPI figures—the last before the Iran war (and its effects on global energy markets) is expected to bleed into the data:

• MoM CPI: +0.3% (estimate: +0.3%)
• YoY CPI: +2.4% (estimate: +2.4%)
• MoM Core CPI: +0.2% (estimate: +0.2%)
• YoY Core CPI: +2.4% (estimate: +2.5%)

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"This is a welcomed number on the surface, but one that may already be outdated," says Alexandra Wilson-Elizondo, Global Co-CIO of Multi-Asset Solutions at Goldman Sachs Asset Management. "February's data was collected before the conflict in Iran sent crude oil surging roughly 30%, with natural gas, aluminum, fertilizer, freight rates, and shipping insurance moving higher with it.

"The Strait of Hormuz remains the wildcard, and if disruption is sustained, the inflation improvement embedded in today's print could reverse quickly. That said, no lasting damage to the Strait has been reported thus far. Should the Strait reopen in short order, shut ins can come back online in as little as 48 hours, with full operations restored within zero to four weeks, and the pass-through to inflation would be limited."

Fuel oil saw the sharpest increase in costs, spiking by 11.1%, which drove energy commodities as a whole 1.1% higher. Utility gas service costs also grew, by 3.1%. Other noteworthy increases in price included apparel (+1.3% month-over-month), gasoline (+0.8%), and medical care services (+0.6%).

The only two areas in which prices actually declined were electricity (-0.7% MoM) and used car and truck prices (-0.4%). But some categories did start to show signs of relief last month.

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"Housing costs, captured by the 'shelter' component of CPI, continued to moderate (+0.2% MoM), while broad services prices also showed meaningful deceleration," says Gargi Chaudhuri, Chief Investment and Portfolio Strategist, Americas at BlackRock. "This has been one of the most encouraging trends in recent months, as shelter has been a component that kept inflation elevated the last few years. Continued easing in this category should help support further gradual progress in overall inflation.

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"Auto-related inflation eased, driven by declines in used car prices and car insurance costs. Airfare prices were broadly in line with the prior month. However, rising jet fuel costs, linked to geopolitical tensions in the Middle East, could put upward pressure on airfares in the coming months."

Fed Expected to Keep Interest Rates Level

While inflation remained above the Federal Reserve's 2% target, Wall Street continues to expect that uncertainty about economic data because of the Iran war will stay the hand of America's central bank, and that the target range for its benchmark interest rate will remain steady at the central bank's next meeting later this month.

Specifically, the CME FedWatch Tool, which uses trading in federal-funds futures to determine Wall Street's expectations for future Federal Reserve actions, now shows a 99% chance that the target range for the federal funds rate will stay at its current 3.50% to 3.75% at the conclusion of the next Federal Open Market Committee (FOMC) meeting, scheduled for March 17-18. The figure also barely flinched last week after a surprise loss in February's jobs report.

"This report alone is unlikely to change the Fed’s calculus for next week’s meeting," says Jason Pride, Chief of Investment Strategy and Research at Glenmede. "The overwhelming expectation remains that policymakers stay on hold.

"Looking further ahead, one to two rate cuts this year remains a reasonable base case, though the path will depend on the balance between the health of a fragile labor market and potential inflation pressures from the Middle East conflict. But if the geopolitical risk premium currently embedded in energy markets begins to fade, it could give the Fed more room to lean toward supporting a fragile labor market."

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What the Experts Think About February's CPI Report

Here, we outline more thoughts from the experts on what last month's CPI numbers mean for consumers, markets, the Federal Reserve's future actions, and more:

John Kerschner, Global Head of Securitized Products and Portfolio Manager, Janus Henderson Investors

"The highlight of today's numbers for us comes from the Owner's Equivalent Rent (OER) measure coming in at 3.17% on a YoY basis—the lowest level since October 2021—proving that affordability of shelter continues to progress. OER is now at the steady state level that we saw from 2016-2020, once housing had recovered from the Global Financial Crisis (GFC) but before the post-Covid spike in HPA (home price inflation).

Now for the not so good news. PCE inflation on Friday will likely look significantly worse than this morning's numbers—likely north of 3%—and even more worrisome, headed in the wrong direction. This is a result of PCE inflation focusing on what consumers actually buy (Personal Consumption Expenditures), and thus, PCE has a higher exposure to healthcare, but less on housing. Over the long term, PCE inflation averages approximately 50 basis points less than CPI, but currently we see this relationship flipped, where PCE inflation is approximately 50 basis points higher."

Josh Jamner, Senior Investment Strategy Analyst, ClearBridge Investments

"CPI printed in-line with consensus expectations for February—a ho-hum release that reflects the period before the escalation of military action in the Middle East that will lift inflation readings next month due to higher energy prices.

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An encouraging sign was the moderation in both core and 'supercore' CPI, showing that price pressures were not accelerating into the current oil price shock, which should give policymakers some degree of comfort. Core CPI stayed at 2.5% on a YoY basis—the lowest reading in nearly four years.

With today’s release already largely 'stale' due to recent events in the middle east, we expect financial markets to have a limited reaction to this news."

David Russell, Global Head of Market Strategy, TradeStation

"Steady disinflation on shelter is a good sign, but tariffs seemed to drive up the apparel category. These inflation numbers provide some comfort, but this month’s spike in energy prices make them a relic of the past.

Investors and the Fed are in uncharted territory right now, taking their cues from crude oil and tanker traffic in the Strait of Hormuz."

Sonu Varghese, Chief Macro Strategist, Carson Group

“CPI inflation for February was along expectations but this is the calm before the storm that will show up due to surging gasoline prices in March. Still, this report does show that the Fed has an inflation problem even if you set aside the energy shock. Tariff impacts are still hitting core goods inflation, while services inflation outside housing remains hot."

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