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Forecasters Asked for More Information About Inflation

For immediate release
Contact: Katherine Q. Dibling at (215) 574-4119

Philadelphia, Pa. – To get a better gauge of what participants in the Survey of Professional Forecasters are thinking about inflation, the Philadelphia Fed has asked them to add their projections for inflation in the price indexes for core and headline personal consumption expenditures (PCE), External Link as well as in the core consumer price index (CPI), External Link to the list of variables in the survey. The change will begin with the first-quarter 2007 survey, to be released at 10 a.m., Tuesday, Feb. 13, 2007. In addition, the panelists have been asked to provide probability ranges for those variables.

Core PCE and core CPI price indexes exclude food and energy prices because the volatility associated with these prices can mean a loss of perspective for analysts charting the direction of inflation trends. Analysts often look to core measures of inflation for information on the underlying trends in inflation, according to Tom Stark, an analyst and manager in the Philadelphia Fed’s Research Department.

“We believe the addition of these variables to the survey will make it a more useful tool for assessing what the experts think about the outlook for inflation,” said Stark.

Every quarter about 45 to 50 professional forecasters are asked to give their views on real GDP, unemployment, payroll employment, and other indicators in the Survey of Professional Forecasters. Formerly conducted by the American Statistical Association and National Bureau of Economic Research, the survey is the oldest quarterly survey of macroeconomic forecasts in the United States. The Federal Reserve Bank of Philadelphia took over the survey in 1990.

The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank holding companies, and provides financial services to depository institutions and the federal government. One of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System, the Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.

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