NEW YORK (CNN/Money) - Inflation is the focus today as the government reported its latest numbers and traders wonder what impact if any they will have on Federal Reserve policymakers over the course of the year.

It used to be people thought the Fed wanted to keep the annual inflation rate around 3% or lower. And that may be about right if you're looking at the overall CPI (which went up 0.1% Thursday).

The Fed is more focused on the core CPI that takes out food and energy prices (yes, you pay them every day and YES they do take a bite, but if you're trying to figure out where the trends are in terms of prices that reflect the economy's strength and not weather, for example, the core works better).

The Fed seems to want to keep the core CPI rate at 2% or lower if it can. Lately it's been in a range between 1.5% to 2.0%.

So why is the Fed hiking rates? Because it wants to keep inflation low. It's convinced that if its key rate remains on par with inflation -- the key rate's now at 1.5% -- then rates will be too stimulative and inflation will flare up sooner or later.