[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321401-105":59,"doc-detail-321401-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","forecasting-inflation-target-the-middle","Forecasting Inflation? - Target the Middle","","Forecasting inflation to guide monetary policy depends on the right measure of underlying price pressures. The piece explains why the median CPI can outperform other trimmed-mean measures in predicting CPI and also better anticipate PCE inflation. It connects this measurement choice to the FOMC’s forward-looking interest-rate guideline that uses forecast-based inflation thresholds. It further contrasts core CPI with trimmed-mean approaches and describes how dropping volatile tails isolates signal from relative-price noise. Empirical comparisons summarize forecasting accuracy across horizons.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/forecasting-inflation-target-the-middle/321401/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/forecasting-inflation-target-the-middle/321401.png","ImageObject",300,407,{"name":92,"@type":93},"Valentina","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-09","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",12,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What does the median CPI measure and why is it useful for forecasting inflation?","Question",{"text":113,"@type":114},"The median CPI is presented as an accurate predictor because it represents an underlying inflation trend. Recent research compares trimmed-mean variants and finds the median CPI tracks future inflation particularly well.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How does the FOMC’s interest-rate guideline relate to inflation measurement?",{"text":118,"@type":114},"The guideline uses forecast-based inflation thresholds for deciding whether to raise interest rates. This allows the FOMC to look through transitory price changes by relying on inflation forecasts rather than only current readings.",{"name":120,"@type":111,"acceptedAnswer":121},"What are the main drawbacks of the core CPI approach?",{"text":122,"@type":114},"The text argues that exclusionary measures treat price changes in excluded categories as noise and can lose information about inflationary pressures. It also notes that retained components can include non-inflation signals, such as excise-tax-driven price changes.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321401,1790013320,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":145,"preview_page_count":4},13056703020460,"https://ap-avatar.wpscdn.com/avatar/be000253dac470eee5d?_k=1778207105932848923","# Forecasting Inflation?Target the Middle\n\nBrent Meyer,Guhan Venkatu,and Saeed Zaman  \nThe Median CPlis wellknown as an accurate predictor of future inflation.But it's just one of many possible trimmedmeaninflation measures.Recent research compares these types of measures to see which tracks future inflation best.Not onlydoes the Median CPl outperform other trims in predicting CPlinflation,it also does a better job of predicting PCE inflation,the FOMC's preferred measure,than the core PCE.  \nAt the end of 2012,the Federal Open Market Committee(FOMC)adopted a new guideline for determining whenit would consider raising interest rates.What is differentabout the guideline is that it gives specific thresholds forvarious economic indicators,which if reached,would signala change in the Committee's interest-rate target.Thesethresholds were spelled out in the meeting statement:“...the Committe...currently anticipates that this exception-ally low range for the federal funds rate will be appropriateat least as long as the unemployment rate remains above6-1/2 percent,inflation between one and two years ahead isprojected to be no more than a half percentage point abovethe Committee's 2 percent longer-run goal,and longer-terminflation expectations continue to be well anchored.”  \nWhile the unemployment-rate threshold is expressed interms of current conditions,the inflation threshold is interms of the outlook for inflation.By specifying the inflationthreshold in terms of its forecasted values,the FOMC willstill be able to “look through”transitory price changes,likethey did,for example,when energy prices spiked in 2008.At that time,the year-over-year growth rate in the ConsumerPrice Index(CPI)jumped up above 5.0 percent butsubsequently plummeted below zero a year later whenthe bottom fell out on energy prices.At the time,theCommittee maintained the federal funds rate target at  \n2.0 percent,choosing not to react to the energy price spike.Under the explicit inflation threshold,the Committee will notlose its ability to remain forward looking,and will relyon forecasts of inflation.  \nTo help inform those inflation projections,Chairman Bernanke,in a recent press conference,stated that the Committee “willconsider a variety of indicators,including measures suchas median,trimmed mean,and core inflation;the views ofoutside forecasters;and the predictions of econometric andstatistical models of inflation.\"In this Economic Commentary,  \nwe highlight the usefulness of trimmed-mean measures(chiefly,the median CPI)in gauging the underlying infationtrend and forecasting future inflation.  \nDrilling Down to the“Core”  \nPerhaps the most well-known underlying inflation measureis the “core”Consumer Price Index(CPI).This measureexcludes the prices of food and energy items because thosewere the two most volatile categories when the core CPIwas conceived.While energy remains the most volatilebroad category,food prices have become much less volatilein recent years.  \nExclusionary measures have a couple of drawbacks.Firstthey always treat price changes in the categories they excludeas noise.This becomes a problem if there is information oninflationary pressures embedded in those excluded categories.More importantly,these measures always treat the pricechanges that they retain as an inflation signal.For example,if an excise-tax increase pushed up the retail price of tobacco,even though that has little to do with inflation,it would get in-cluded in the core CPI,hence overstating underlying inflation.  \nFortunately,there are alternatives to the core CPI.Oneis trimmed-mean inflation statistics.These measuresseparate the inflation signal from relative-price noise byignoring the most volatile monthly price swings.Calculatinga trimmed-mean measure is relatively simple.The monthlyprice changes in the consumer market basket are orderedfrom lowest to highest price change,and the tails of the distri-bution are dropped.For example,the symmetric 16 percenttrimmed-mean CPI cuts ","cbCaiohnrhlYvlUc","https://ap.wps.com/l/cbCaiohnrhlYvlUc","pdf",1446869,"English","# Forecasting Inflation? - Target the Middle\n## Why the Median CPI Works\n## Core CPI and Its Limitations\n## Trimmed-Mean and Median CPI Methods\n## Forecasting Accuracy and Evidence\n## Table 1. Forecasting Accuracy For CPI Inflation over the Next One to Two Years","[{\"question\":\"What does the median CPI measure and why is it useful for forecasting inflation?\",\"answer\":\"The median CPI is presented as an accurate predictor because it represents an underlying inflation trend. Recent research compares trimmed-mean variants and finds the median CPI tracks future inflation particularly well.\"},{\"question\":\"How does the FOMC’s interest-rate guideline relate to inflation measurement?\",\"answer\":\"The guideline uses forecast-based inflation thresholds for deciding whether to raise interest rates. This allows the FOMC to look through transitory price changes by relying on inflation forecasts rather than only current readings.\"},{\"question\":\"What are the main drawbacks of the core CPI approach?\",\"answer\":\"The text argues that exclusionary measures treat price changes in excluded categories as noise and can lose information about inflationary pressures. It also notes that retained components can include non-inflation signals, such as excise-tax-driven price changes.\"}]","Forecasting Inflation? - Target the Middle | PDF",1789959193,13]