Tim Iacono, back at Seeking Alpha has an interesting take on why the Feds do what they do.

The thing I learned, which, in this light makes sense why there is very little logic in their actions, is that the government’s inflation statistics do not track home prices directly but use an estimate of what homes would rent for. And your guess is as good as mine or theirs, for that matter of fact but how much should homes rent for anyway? This is very nebulous and I still haven’t grasped the finer subtleties of drawing conclusions like that. I would think real home, current prices and checked against inflation would be a more accurate way of looking at things.

He then shows more graphs of how things would look if the Fed’s decision would be based on home prices instead of owners’ equivalent rent.

It’s well worth a read and it might, just might give an extra insight into the Feds’ mysterious ways. For that they are…