How’s my formula
doing, now that the latest FOMC minutes
have been released? If you recall, I said that when it comes to the Fed’s inflation
target,
I=C=H=c=h
Where I is the Fed’s de facto inflation target, C is the most recent 3-year
core inflation forecast, H is the most recent 3-year headline inflation forecast,
c is the previous 3-year core inflation forecast, and h is the previous 3-year
headline inflation forecast.
Well, we’ve only had one set of these 3-year forecasts, so c and h don’t exist.
But at first glance I=C=H, since the 3-year core inflation forecast of 1.6%
to 1.9% is the same as the 3-year headline inflation forecast of 1.6% to 1.9%.
We can therefore say that the Fed’s inflation target is between 1.6% and 1.9%.
That said, however, the two forecasts are not completely identical. While the
range of projections in both cases is the same, for core inflation a plurality
of participants projected between 1.7% and 1.8%, while for headline inflation
a plurality projected between 1.9% and 2.0%. So clearly there are individual
FOMC members who have different 3-year projections for each one. Overall, however,
my equality holds.