Today, June 29, 2006, the US Federal Reserve Bank is expected to lift the short-term interest rate to 5.25%, the 17th times it had raised the rate in as many meetings. This is in response to the specter of raising inflationary pressures. It is said, depending on who you believe or listen to, that the nominal inflation rate is around 4-4.5% annually, but the rate that the Fed listens to is the one that excludes the cost of so-called volatile items, the core inflation rate, is running around 3%. Not so bad, at all.
The core inflation is, of course, for people who do not drive cars, even the hybrid kind, heat or cool their houses, do not eat very much, and do not get ill or at least do not seek medical help no matter how sick they get. That is, more like people in most of Africa! Instead, these people- we're referring again to those in the US whose inflation rate is the core inflation rate- spend all their money buying flat-panel displays, computers, gaming machines, software, but not business software, GM or Ford cars that are hugely and artificially discounted, and stock up on home appliances. The core inflation rate is for these people.
Which of these categories do you belong to?
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