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Two Measures of Core Inflation: A Comparison

No. 1903

Jim Dolmas and Evan F. Koenig

Abstract: Trimmed-mean Personal Consumption Expenditure (PCE) inflation does not clearly dominate ex-food-and-energy PCE inflation in real-time forecasting of headline PCE inflation. However, trimmed-mean inflation is the superior communications and policy tool because it is a less-biased real-time estimator of headline inflation and because it more successfully filters out headline inflation’s transitory variation, leaving only cyclical and trend components.

DOI: https://doi.org/10.24149/wp1903

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