Technically, the Fed targets the PCE deflator, but many use the core PCE as a proxy. I show what the data indicate, including the Cleveland Fed’s nowcast as of 3/14 for February.
Figure 1: Core PCE deflator year-on-year inflation (blue), and instantaneous per Eeckhout (2023), at annual rates. February 2024 observation is Cleveland Fed nowcast as of 3/15. Red dashed line at 2%. Source: BEA, Cleveland Fed (3/15), NBER and author’s calculations.
Taking the instantaneous measure, we’re a percentage point and a half above target, while the q/q measure is 1.2 ppts.
Source link
