If the Fed sees rising commodity prices as inflationary, because they’ll increase producer prices, manufacturing costs, and ultimately show up in the CPI, then the recent rise in gold, copper, oil, silver, etc. would be considered inflationary and a reason for further tightening.

But the rising prices will in and of themselves lower consumer spending, as consumer goods rise in cost. There is no need for the Fed to tighten. Furthermore, even if they tighten, would that have any effect at all on gas and commodity prices? Demand is dampened already by the fact of the higher prices.

It seems the commodity and oil prices are going up independent of monetary supply, since their prices are rising in other currencies too. Excess demand is causing the prices to rise, not inflation.

So if price inflation can exist outside of monetary inflation, why does the Fed look only at CPI?

If they are causing inflation by issuing more bonds, why don’t they stop issuing so many bonds? It seems in my simple reasoning that the government is the cause of the inflation, but then take it out on the consumer by raising interest rates. Then the government has to service higher debt. Does this even make sense?