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And it's ~5% if you annualize last months MoM core measure. The Fed is making judgements primarily off of core, not headline. e.g. Oil dropped to ~$65 last mon
by adam_arthur 4y ago
And it's ~5% if you annualize last months MoM core measure.
The Fed is making judgements primarily off of core, not headline. e.g. Oil dropped to ~$65 last month, but is now at ~$85. Does it make sense to consider last month's number a durable trend down given that the low headline was primarily due to decline in energy prices? A decline that doesn't exist anymore? No, not really.
CPI in general is a poor measure for driving Fed policy since many measures are lagged, but even still, far more sensible to use core and strip outliers
- dragontamer 4y agoFed policy is based around PCE these days, not CPI. Because PCE is more-leading than CPI is. (Or less lagged?)
- adam_arthur 4y agoYou're right, they technically use Core PCE, rather than Core CPI. But if you look at a chart of the two they are very tightly correlated. They can be used pretty much interchangeably as an inflation measure, methodology not different enough to create material differences.