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Press Release

Cleveland Fed researchers introduce new median PCE measures

Divining the trend in inflation is a constant challenge for economists. In their latest economic commentary, Cleveland Fed researchers Daniel Carroll and Randal Verbrugge introduce two new measures of trend inflation, a median PCE inflation rate and a median PCE excluding owners’ equivalent rent (OER) inflation rate, and investigate their performance.

The researchers highlight two main findings. First, both the median PCE inflation measure and the median PCE excluding OER inflation measure are useful indicators of the trend in inflation. Second, their performance relative to the other simple measures worsened after the Great Recession, and this worsening performance is related to the changing cross-sectional asymmetry of the growth rates of the components of PCE inflation.

“Our analysis indicates that both perform comparably to other simple trend inflation estimators such as the trimmed-mean PCE,” say Carroll and Verbrugge. “Furthermore, as performance of the median PCE is related to skewness in the distribution of cross-sectional growth rates across categories in the PCE, our results suggest that the Bowley skewness statistic may be useful in forecasting.”

Read more: Behavior of a New Median PCE Measure: A Tale of Tails

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