The Federal Reserve no longer uses the Consumer Price index to calculate its monetary policy adjustments and instead use the Median CPI.
So instead of calculating a weighted average of all of the prices, as the BLS does, the Cleveland Fed looks at the median price change—or the price change that’s right in the middle of the list of all price changes.
In September 2007, the Cleveland FED changed the way it calculates the median consumer price index. Since the Owners’ Equivalent Rent (OER) component of the CPI was such a large portion of the total they found it was creating a potential problem in the inflation signals they were getting. They decided to break the OER into four regional subindexes, improving the ability of the trimmed-mean CPI data, and especially the median CPI, to measure the real inflation trend.
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