Inflation rose to 3% for the year ending in January, the Bureau of Labor Statistics reported Wednesday in an update to the consumer price index, a sign that price pressures may be stronger than thought and lowering the odds of further rate cuts from the Federal Reserve in the upcoming months.

Most economists had predicted that inflation in the index would remain at 2.9% after increasing in December. The increase is bad for President Donald Trump, who has now inherited the economy from President Joe Biden.

On a month-to-month basis, inflation rose 0.5%.

This is the first CPI report of Trump’s presidency and will be closely scrutinized. Trump vowed to lower inflation on the campaign trail and entered office, in part, because of that commitment. If inflation doesn’t begin to meaningly fall, Democrats will seize the opportunity.

Core CPI inflation, which strips out volatile food and energy prices, rose to at 3.3% for the year ending in January.

Officials at the Fed are watching the inflation numbers closely to determine whether to lower interest rates further to spur more economic activity or to forgo further rate cuts to try to tamp down inflation.

The Fed cut rates by a whole percentage point last year. As inflation proved sticky, though, thecentral bank opted to hold interest rates steady at its January meeting.

The Fed’s goal is 2% annual inflation.

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The most recent jobs report bolstered perceptions that the Fed is going to hold off on cutting rates in the near term.

That is because the report continued to show job growth and the unemployment rate edged down a bit 4%. The economy added 143,000 jobs in January, showing that there is no desperate need yet to begin cutting rates to shore up the labor market.