> You ask me about the methodological "issues" then immediately turn around to defend them... Kind of odd. If you really felt so strongly about this, wouldn't you have already been aware?

Because I want to understand your position before arguing against it, rather than imagine what your arguments are and putting them in your mouth.

>The CPI is the primary tool the Fed uses to set policy, policy whose effect has a multi month lag of its own. So by using backwards looking metrics, we severely impair the ability of the fed to set appropriate policy in a timely manner.

It'll be nice if we had a forward looking metric, but that changes nothing about what the CPI is. The BLS publishes the methodology and/or goals of the CPI, so the fact that it's not forward looking isn't some sort of secret.

>If you think the backwards looking metric is still useful, then the Fed should create a new metric based off current market rates, and use that instead.

AFAIK they use a combination of present data + expert predictions to base their decisions. Using "current price for rent/housing" CPI might make it forward looking for rent/housing, but it does nothing for other components (eg. energy/food), because those prices aren't locked in for consumers. If you actually want a forward looking metric, your best bet are financial instruments linked to CPI and/or prediction markets.

> it's intellectually dishonest to defend using backwards looking metrics in the CPI methodology as a forecasting tool for Fed policy. The current methodology clearly masks the actual current market rates for rent.

I don't get it, is the CPI supposed to be the end all be all metric for interest rate policy? I don't think that's a position that I expressed, nor is something the fed holds.

>Including rent controlled units tells us nothing of inflation, by definition. So why does the Fed consider these?

>Example: it took a whole year for inflation to be acknowledged as a problem, and rents have barely shown up in it at this point. There are a few percentage points higher on CPI to come from rent alone (assuming other factors stay constant)

>Using current market rates is not forecasting anything, it's telling you what rents are today. Using rents from a year ago is backwards looking, pretty obviously. It's a current snapshot of what people are paying, not what price levels are. Which is a fairly useless metric, as the the intent of Fed policy is to influence market pricing, and the biggest use case for the CPI is to provide datapoints to help forecast the path of inflation.

I think the problem here is that rent, unlike most things, have their prices locked in months/years in the past. This is unlike most other things in the CPI. You don't lock in your gas prices 6 months in the past, nor do you lock in your supermarket bill. While it's true that prices in the present will eventually be paid by someone in the future, they're also not reflective of what the average american is actually paying today. If you use current prices for some goods, plus current prices for rent (rather than whatever BLS is doing now), then the CPI becomes a weird mix of current + future prices. Imagine a commodities index that is composed of 5 year futures for crude, 3 year futures for wheat, and spot prices for natural gas. What would that even represent?