We ended the week with a fresh look at wholesale inflation. January’s Producer Price Index (PPI) came in stronger than expected, reinforcing that inflation pressures remain sticky in parts of the economy. The PPI for final demand rose +0.5% month over month, above forecasts around +0.3%, and on a 12-month basis it was +2.9%, topping expectations tied to ~2.6%. Core prices (excluding food, energy, and trade services) also continued to firm, climbing roughly +0.3% (for the month) and from a somewhat elevated annual base. Services, especially trade margins at wholesalers and retailers, were big drivers of the headline increase, while goods prices declined modestly.
This stronger wholesale inflation point matters because it feeds into broader price trends, including things like PCE inflation that the Fed watches closely. A hotter PPI than expected can slow expectations for near-term rate cuts or make the Fed more cautious on future easing. We also had several Fed governors speak around the country at various events over the week. Here is a sample of what was being discussed:
- Christopher Waller (Fed Governor):A March rate cut is basically a “coin flip” — it will depend on whether the next jobs report confirms real labor-market improvement.
• Waller again:Focus is on incoming data, especially labor market trends, not tariff noise, in deciding rate direction.
• Lisa Cook (Fed Governor):AI-driven shifts in the labor market may require non-monetary tools — and that restricts how much the Fed can lean on rate cuts.
• Austan Goolsbee (Chicago Fed President):I’m optimistic about several rate cuts this year — but don’t want to rush before inflation is clearly heading to 2%.
• Susan Collins (Boston Fed President):It’s likely appropriate to hold policy steady for now — we’re taking a patient, data-dependent approach before cutting further.
• Thomas Barkin (Richmond Fed President, recent comments):Policy is well-positioned, and future changes should balance progress on both employment and inflation, guided by clean incoming data.
So, what is this telling us? Overall, there’s a common theme of caution and data dependency. Officials are not signaling an imminent move at the next meeting but many still see potential for rate cuts later in 2026 if inflation continues to cool and labor data softens enough to justify easing. The emphasis is on waiting for clear evidence (especially on jobs and inflation) before acting.
Interesting to Note:
Even as core inflation at the consumer level has eased, wholesale prices tell a slightly different story — especially around services and trade margins. That difference is one reason the Fed often looks beyond headline CPI/PPI and toward broader measures like PCE and labor cost trends to judge inflation sustainability.
Looking Ahead:
- Fed-watchers will be all over the upcoming PCE inflation release (March 13th), the data most closely tied to the Fed’s 2% target.
- More “growth vs. slowdown” signals (ISM-style surveys, jobs-related updates, and more Fed speakers).
- Housing data (starts, permits, interest rates) could add further detail on where residential demand is heading.
- Any tariff policy updates or legal rulings will remain headline drivers for cyclical sectors.
A Mosaic Update:
I’m excited to welcome our newest team member, Clare who joined us earlier this year as our Administrative Assistant. She is the first point of contact when you walk through our door and the friendly voice you hear when you call the office. Clare graduated from Franklin & Marshall College in 2023 and will begin her MBA at the Johns Hopkins Carey Business School this summer. Outside of the office, she enjoys hiking with her dog, Dobby, paddle boarding, exploring new countries, and spending time with friends. We are excited to welcome her to the Mosaic family!
https://www.reuters.com/business/two-fed-officials-do-not-see-imminent-need-change-monetary-policy-2026-02-24/
https://www.cnbc.com/2026/02/27/ppi-january-2026-.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.federalreserve.gov/newsevents/speech/waller20260223a.htm
https://www.federalreserve.gov/newsevents/speech/cook20260224a.htm
https://www.federalreserve.gov/newsevents/speech/bowman20260226a.htm
Christopher E. Wasson, CFP®
President
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
MosaicAssetPartners.com
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.
