Fmr. Obama Treasury Official Rattner: February CPI ‘Not a Good Thing’ for Getting Inflation to Goal, ‘What the Fed Really Looks at’ ‘Is Rising’

On Wednesday’s broadcast of MSNBC’s “Morning Joe,” Steve Rattner, who served as counselor to the Treasury Secretary in the Obama administration, stated that the core services inflation metric that the Federal Reserve “really looks at” is “rising and that is not a good thing” to getting inflation down to the target level.

Rattner said, “[I]nflation looked to be coming down if you look at the headline number, from 6.3 to 6 during the month, but the numbers are very squirrely still at the moment because of COVID-related things. So, we have to look behind the numbers at some more interesting and hopefully relevant data. So, what we’ve done over here is we’ve looked at three-month annualized numbers for the CPI, and we’ve broken it into two buckets: The headline number, which is the number that you report and everybody reports up front, and then what we call core. We take out food and energy, which are very volatile and the Fed does not look at that closely in terms of deciding how much inflation is in the economy and what they need to do about it. And then we break that down a little bit further into core services, your lawyers, your doctors, travel, all that kind of stuff…and then goods, whether you’re actually buying a new car or something of that sort. And what you see on a three-month trailing basis, is that core inflation actually accelerated a bit, that’s not good. Goods inflation is still falling, not as much, but that’s okay. But what the Fed really looks at is core services, and that is rising and that is not a good thing in terms of getting inflation down to that 2% level, which you can see is way below where it is at the moment.”

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