I would like to help you but need more specific information on the timings of the PSA tests. Your age, your case, if any, etc.
PSA 0.0 to 4.0 is treated as normal but there have been cases of men with PSA of 2.5 which was connected to prostate cancer (earlier stage). I recommend you to research the net for information on the matter.
Why would my PSA level decline to 1.6 from a level of 2.7 eight months earlier?
Do you have PSA scores preceding the 2.7? If they were lower, maybe the reason for the rise is the question, but a sort of an academic one since it is happily lower. As you know, infection and other non-cancer factors can cause a temporary spike. Perhaps the next PSA will not return to the higher level. Hope you can continue smiling and able to ask questions about a DECLINE in PSA.