Economists expect that the Federal Reserve's preferred measure of inflation will once again show an increase, which could create a conundrum for central bank officials as they try to chart the path ahead for interest rates.

The Personal Consumption Expenditure (PCE) report released Friday is expected to show prices increased 0.4% for February, according to a survey of economists conducted by Dow Jones Newswires and The Wall Street Journal. It would be the second consecutive month that consumer prices increased, making it more difficult for Federal Reserve officials to write it off as a temporary setback in their fight against inflation.

"The takeaway from the March meeting of the Federal Open Market Committee [FOMC] is that policymakers aren't ignoring recent inflation data but aren't panicking," wrote Oxford Economics' Nancy Vanden Houten. "The Fed clearly wants to see more inflation data before cutting."

Friday's reading will also show inflation rising 2.5% over the year ending in February if economists are correct. That would be above January's annual rate of 2.4%.

The Federal Reserve has been working to tame inflation since it began rising in the economic recovery from the pandemic-induced downturn. Over roughly a year and a half, the Fed raised rates five percentage points. Officials have signaled that a cut is on the horizon, and have said they are relying on the data to help them decide on a timeline.

A second consecutive month of data showing growing inflation may not signal a resurgence of inflation, but it could push rate cuts further down the road.

"The risk of easing monetary policy too much or too soon is that it could allow above-target inflation to become entrenched and halt the progress that we have seen," said Fed Governor Lisa Cook in prepared remarks Monday. "... The path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market."

Cook's colleague Christopher Waller said Wednesday evening there was no rush to cut interest rates, arguing that stickier-than-expected inflation indicates that current rates need more time to work. 

"The data we have received so far this year has made me uncertain about the speed of continued progress," Waller said. "It tells me that it is prudent to hold this rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%."

Update, March 28, 2024: This article has been updated to include Federal Reserve Governor Christopher Waller's comments.