Nearly three months into the new year, and the overall narrative feels eerily familiar. Wall Street is once again focused on inflation! Even as the Consumer Price Index (CPI) inches closer to the Federal Reserve’s 2% target, policymakers are showing little urgency to adjust interest rates. Their message has remained consistent: inflation still feels a bit too sticky, and they want the impact of last year’s rate cuts to continue working through the system. Historically, monetary policy takes six to eight months to fully filter through the economy. From the Fed’s perspective, time is an asset—and they appear willing to use it.
This week’s inflation data reinforced that cautious approach. The Consumer Price Index rose 0.3% in February, while core CPI increased 0.2%, both largely in line with expectations. On a year-over-year basis, inflation is running around 2.4% overall and 2.5% on a core basis, suggesting the broader cooling trend in prices remains intact. Housing-related costs continued to be one of the biggest drivers of the index, while categories like medical care and apparel also posted modest increases.
The latest reading on the Federal Reserve’s preferred inflation gauge told a slightly different story. The Personal Consumption Expenditures (PCE) index showed prices rising 0.3% in January and 2.8% from a year earlier, while core PCE, which excludes food and energy, climbed 0.4% for the month and 3.1% year over year. At the same time, the broader economic picture showed signs of slowing. The fourth-quarter GDP was revised sharply lower to just 0.7% annualized growth, down from the earlier estimate of 1.4%. Much of that slowdown was tied to softer consumer spending and exports during the quarter. Together, the data highlights the balancing act facing the Federal Reserve—cooling growth alongside inflation that still sits above its target.
Adding another layer of uncertainty is the growing geopolitical risk surrounding energy markets. Investors are increasingly focused on the potential fallout from U.S. strikes in Iran and the risk that disrupted oil flows from the Persian Gulf could further tighten global supply. If the same level of demand begins competing for fewer available barrels, fuel prices will move higher. The longer instability lingers in the region, the greater the risk that rising energy costs could feed back into inflation and complicate the Fed’s path toward future rate cuts.
Meanwhile, the housing market is quietly sending a different signal. Existing home sales posted a modest rebound in February, but underlying trends suggest activity may be cooling. Homes are taking longer to sell, sitting on the market for an average of 66 days in February compared with 61 days in January and 59 days a year ago. That marks the slowest turnover since 2016. Inventory has improved slightly, though supply remains well below what economists consider to be a balanced market. For now, limited supply continues to support home prices even as buyer demand shows signs of softening.
Taken together, the data paints a picture of an economy that is trying to find its footing. The geopolitical climate is making this a real challenge. Forecasters will continue to debate the timing of rate cuts, but for the Federal Reserve, the message remains clear: they are willing to wait for more convincing progress before making their next move.
Interesting to Note
The first official day of spring arrives on March 20 this year, marking the spring equinox when day and night are nearly equal in length around the world. From that point forward, daylight hours in the Northern Hemisphere will continue to grow longer each day until the summer solstice in June.
Looking Ahead
- Federal Reserve Meeting – The Fed’s next policy meeting is scheduled for March 18–19, where investors will be watching closely for any updates on the timeline for potential rate cuts.
- Retail Sales Data – Next week’s retail sales report will provide a fresh look at consumer spending, a key driver of overall economic growth.
- Housing Starts and Building Permits – New housing construction data could offer insight into whether supply constraints in the housing market are beginning to ease.
- Oil Markets – Ongoing developments in the Middle East will remain in focus as investors monitor the potential impact on global energy prices and inflation.
Enjoy the longer daylight… spring is right around the corner. 🌷
https://www.cnbc.com/2026/03/13/fourth-quarter-gdp-revised-down-to-just-0point7percent-growth-january-core-inflation-was-3point1percent.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail
https://www.cnbc.com/2026/03/11/cpi-inflation-report-february-2026.html
https://www.cnbc.com/2026/03/10/february-home-sales-see-small-rebound-but-supply-growth-is-sluggish.html
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
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