I'm wondering whether someone can explain this to me: 1. The Fed has one lever to pull when it comes to inflation - raising interest rates 2. Higher interest rates = higher cost of shelter for a number of reasons - just to name a few, 1. Higher interest rates has an inverse relation with new housing starts; 2. Higher interest rates has a positive correlation with higher rental rates; 3. I haven't seen the latest numbers, but prior to the spiking interest rates, there already was a deficit of housing units when compared to households, and the rate of new housing unit creation was slower than the rate of new household formations - now, I'm not a PhD in economics like Issi Romem but I'm pretty sure that a deficit in housing supply leads to more demand and that generally has a positive relation with increased prices 3. So what is the logic behind the Fed maintaining high interest rates when cost of shelter seems to be the biggest culprit when it comes to inflation at this point? Just for reference, I've included the YoY change in the CPI vs the YoY change in the ave 30-yr. Since 2000, r=.66
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