Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

When the Reserve Bank determines the interest rates, do they take the house prices into account?
The Central Banks sets various rate for lending to Banks and Paying interest to Banks on excess funds. Apart from these the Central Banks also sets various other ratios that either create more liquidity or remove liquidity from Market.  The CPI is just one input to the Central Bank to determine rate, is not the only deciding criteria. The CPI does not take into account the house price or the cost of renting in the basket of goods.  One of the reasons could be that CPI contains basic essentials and also the fact that it should be easily mesurable over the period of time. For example Retail Price of a particular item is easily mesurable. The rent is not easily mesurable.