Journal Article

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.

Keywords: Consumer price indexes; Forecasting; Inflation (Finance);

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2013

Issue: Apr

Order Number: 05