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Federal Reserve Bank of Cleveland
Economic Commentary
Forecasting inflation? Target the middle
Brent Meyer
Guhan Venkatu
Saeed Zaman
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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Brent Meyer & Guhan Venkatu & Saeed Zaman, "Forecasting inflation? Target the middle" , Federal Reserve Bank of Cleveland, Economic Commentary, issue Apr, 2013.
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Keywords: Forecasting ; Inflation (Finance) ; Consumer price indexes
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