Forecasting inflation? Target the middle
Abstract: The Median CPI is well-known as an accurate predictor of future infl ation. But it?s just one of many possible trimmed-mean inflation measures. Recent research compares these types of measures to see which tracks future inflation best. Not only does the Median CPI outperform other trims in predicting CPI inflation, it also does a better job of predicting PCE inflation, the FOMC?s preferred measure, than the core PCE.
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Description: Full text
Provider: Federal Reserve Bank of Cleveland
Part of Series: Economic Commentary
Publication Date: 2013
Issue: AprOrder Number: 05