On MSNBC’s “Morning Joe” Wednesday, Steve Rattner, who served as adviser to the Secretary of the Treasury in the Obama administration, said the core service inflation rate that the Federal Reserve is “really looking at” is “rising, and that’s not a good thing” for reducing inflation to the target level.
Ratner said:[I]Inflation seemed to be coming down, if you look at the headlines of the numbers, from 6.3 to 6 over the course of a month, but the numbers are very volatile at the moment due to things related to COVID. So we should look past the numbers for some more interesting and hopefully relevant data. So what we’ve done here is look at the three-month annual figures for the CPI and break it down into two parts: The heading, which is the number you report, and everyone reports up front. and then what we call core. We’re exporting food and energy, which are very volatile, and the Fed doesn’t look at them closely to decide how high inflation is in the economy and what they need to do about it. And then we break it down a little further into basic services, your lawyers, your doctors, travel, all that… and then goods, whether you’re actually buying a new car or something. And what you’re seeing on a three-month basis is that core inflation has actually picked up a bit, which is not good. Commodity inflation is still falling, not as much, but that’s normal. But what the Fed is really looking at is basic services, and they’re on the rise, and that’s not good in terms of bringing inflation down to 2%, which, as you can see, is much lower than it is at the moment.”
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