Quote:
Originally Posted by Buehler445
list of inflation. Lumber is probably somewhat in there. Buy fuel is most certainly not. In 09 I happened to be at a seminar where the director of the KC fed walked through it all and food and fuel were not listed because they are so volatile they’re hard to track. WTF. That shit was wrecking the economy in those days.
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I think you may have misunderstood. What this person was almost certainly referring to is the fact that the Fed targets core inflation (actually core PCE which is a bit different from core CPI primarily due to the way it treats at housing costs and medical expenses) and that those core measures exclude food and energy. The rationale is that they’re volatile and subject to supply/demand factors that the Fed can’t easily control and that short term disruptions usually revert.
Classic (error) case is the ECB who targets headline inflation (HICP) and they hiked into the housing crisis in 2008 because energy was spiking. This was not a welcome decision.