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https://archive.is/j87ct https://archive.is/j87ct

• hcmacro 3y ago
  CPI ain't PCE my guy. Other than suggesting a firm January print, this print has not really changed forecasts for core PCE--the Fed's preferred target---to hit 2% yoy by May.
  • lamontcg 3y ago
    Core services inflation is up and the Fed doesn't just care about only one number, and I'm not your guy.
    • hcmacro 3y ago
      Nope, the Fed cares about PCE because that’s the inflation measure it targets over time. Consequently, core PCE and core PCE services ex-housing. CPI and PPI matter for policy setting to the extent that their components feed into PCE. But Core CPI Services-XH and Core PCE Serviced-XH have little overlap in their components. The Fed is concerned about the latter falling because real rates, in the model that the Fed uses, get tighter the longer rates remain on hold. Just look at the last quarterly SEP—it forecasts PCE not CPI.
      • lamontcg 3y ago
        Go argue with the Richmond Fed, then, and explain to them how the Fed never cares about anything other than the PCE number and services is meaningless: https://www.richmondfed.org/research/national_economy/macro_minute/2023/mm_01_10_23 https://www.richmondfed.org/research/national_economy/macro_...