MURDER, POLITICS, AND THE END OF THE JAZZ AGE
by Michael Wolraich
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Time For Fed To Emphasize Other Price Gauges
By Donal on Thu, 01/20/2011 - 4:46pm |It’s time for the Federal Reserve to start emphasizing its own alternative measures of inflation trends.
To gauge where prices are heading, since the 1970s the Fed’s been focusing the public’s attention on a core inflation measure that strips out volatile food and energy prices, making the central bank sometimes look arbitrary and out of touch with reality.
Two little-known measures compiled by economists at the Federal Reserve Banks of Dallas and Cleveland since the 1990s may provide the solution. They both use a more scientific approach to forecast where inflation will be in two years — the time it can take for Fed decisions to impact the economy.
The Dallas Fed’s trimmed mean personal consumption expenditure rate and the Cleveland Fed’s median consumer price index have both proven to be better predictors of inflation.
URL:
http://blogs.wsj.com/economics/2011/01/14/time-for-fed-to-emphasize-other-price-gauges/
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