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Press Release

Several different models show PCE inflation rising gradually this year and next, say Cleveland Fed researchers

For some time, inflation has fallen short of the Federal Reserve’s long-run objective for consumer price inflation of 2.0 percent, as measured by the price index for Personal Consumption Expenditures (PCE). Comparing projections from four different measures of the inflation trend that have been found to forecast relatively well, Federal Reserve Bank of Cleveland researchers Todd Clark and Christian Garciga find that, for the most part, the models imply similar outlooks for inflation over the next two years, with PCE inflation rising gradually in most cases and core inflation remaining in the vicinity of recent levels.

The researchers say that all four models project a rise in overall PCE prices to around 1 percent in 2016. Three of the four models also project that PCE inflation will continue to rise gradually, to between 1.3 and 1.7 percent in late 2017. All of the models suggest that core PCE inflation will remain around 1.5 percent.

The researchers note that CPI measures of inflation paint a more mixed picture of price trends. While overall CPI inflation, like PCE inflation, has been stable at an extremely low level, measures of core CPI inflation have been drifting up. Examining the forecasts from their four models, Clark and Garciga find that all four project a more or less flat path for core CPI inflation, ranging from 1.9 to 2.1 percent in late 2017.

Read Recent Inflation Trends

Federal Reserve Bank of Cleveland

The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.

The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.

Media contact

Doug Campbell,, 513.455.4479