(NEW YORK) — Consumer prices rose 3.1% in January compared to a year ago, slowing markedly from the previous month but missing expectations of an even larger cooldown, a report from the Bureau of Labor Statistics released on Tuesday showed.

Still, the falling inflation offered welcome news for the Federal Reserve as it weighs interest rate cuts.

Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 3.9% over the year ending in January, matching the cooldown from the prior month.

The report from the U.S. Bureau of Labor Statistics follows a slight acceleration of price increases in December.

That jump in inflation had complicated the Federal Reserve’s plans to deescalate its inflation fight with a series of interest rate cuts this year.

Fewer than two weeks ago, the central bank decided to leave interest rates unchanged, opting to observe further economic performance before reversing a near-historic series of rate increases that began last year.

The slowdown of inflation in January amounts to a positive sign for the Fed ahead of its next rate decision in March.

Inflation has fallen dramatically from a peak last year, but it remains nearly a percentage point above the Fed’s target.

The U.S. economy has largely defied the central bank’s efforts to slow the economy by raising borrowing costs for households and businesses.

The economy far exceeded expectations by adding 353,000 jobs last month while holding the unemployment rate steady at 3.7%, a historically low figure, according to data released by the U.S. Bureau of Labor Statistics earlier this month.

Gross domestic product performed much better than expected at the end of last year, a report this month showed, while consumer sentiment soared in January.

The blockbuster performance, however, could pose a challenge for the inflation fight taken up by policymakers at the Federal Reserve.

The Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand could lead to an acceleration of price increases.

Speaking in Washington, D.C., late last month, Fed Chair Jerome Powell celebrated the steady decline of inflation over recent months and welcomed the robust hiring occurring alongside it. However, he cautioned about the risks posed by an economy that runs too hot.

“We’re not looking for a weaker labor market,” Powell said. “We’re looking for inflation to continue to come down, as it has been coming down for the last six months.”

“We’re not declaring victory at this point,” he later added. “We think we have a ways to go.”

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