Does anyone remember when the Fed use to focus on “Core Inflation?” The argument back then was that you should exclude volatile things like Energy and Food to get a true picture of the underlying inflationary pressures. Now get this from the Fed Report….

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

Why don’t they strip out Energy and Food prices to get a true picture of the underlying inflationary pressures? As Megan McArdle notes…

The fall in the CPI was driven almost entirely by energy prices, without which the price index was flat.

When the CPI was high, people argued that interest rates should not be raised because underlying cause for the high CPI numbers was a rise in volatile energy prices. Now those same people argue that we need to cut rates because volatile energy prices are falling. I just don’t get it.

Even relative optimists like Felix Salmon are starting to get a little worried. At the closing of his post dealing with today’s cuts he says…

Did we really need a zero interest rate policy, or Zirp, on top of this? It would be great if we could get some reassurance from FOMC members that they understood the downside of today’s move and know what they’re doing. Because it really worries me.

Editors Note: The “This” in the above quote is referring to the Fed’s promise to print money and intervene directly in the markets.