Forecasting Inflation? Target the Middle

The Median CPI is well-known as an accurate predictor of future inflation. 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 predi...

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Bibliographic Details
Published in:Economic commentary (Cleveland) 2013-04 (2013-5), p.1-4
Main Authors: Meyer, Brent, Venkatu, Guhan, Zaman, Saeed
Format: Article
Language:English
Subjects:
Accuracy
Committees
Consumer Price Index
Economic forecasts
Energy prices
Federal funding
Federal funds rate
Forecasting
Forecasts and trends
Inflation
Inflation (Finance)
Noise
Studies
Unemployment
Citations: Items that cite this one
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Summary:The Median CPI is well-known as an accurate predictor of future inflation. 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.
ISSN:0428-1276
2163-3738
DOI:10.26509/frbc-ec-201305