I know Donald Trump is lots of fun and everything, but people should be paying at least a little attention to inflation, or the lack thereof. Remember, last time we tuned in the Federal Reserve Board was embarked on a process of tightening through a sequence of interest rates hikes. The concern expressed by proponents of higher rates was that the economy was too strong and that inflation would soon be rising above its 2.0 percent target. (Actually, the target is supposed to be an average, which means at the peak of a recovery the inflation rate should be somewhat higher than 2.0 percent.)

The March data seems to undermine this concern. While monthly data are erratic, it was striking because both the overall and core rate were negative in the month. The core CPI dropped by 0.1 percent in March, its first decline in more than seven years.

Furthermore, even the modest inflation shown by the core index is largely due to rents. While higher rents do affect people's cost of living, the Fed is not going to slow rental inflation by raising interest rates. In fact, by slowing construction, the near-term impact of higher interest rates could be to increase inflation in rents.

Over the last year, a core CPI that excludes rent has risen by just 1.0 percent.

Year over Year Change in Core CPI, Excluding Housing

CPI core housing

Source: Bureau of Labor Statistics.