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Mr. Bernanke, in an attempt to limit the damage and hasten the healing, is likely to keep the Fed's rate low — lower, even, than the measured inflation rate.
Mr. Green and other Western economists warned Friday and over the weekend that officially measured inflation at the consumer level could reach 5 percent by the fourth quarter and lead to an increase in interest rates by China's central bank.
When the chancellor obliged the MPC to write to him to explain whenever measured inflation differed from the target by more than one percentage point, Mervyn King, now one of the Bank's deputy governors, joked that this edict would restore the lost art of letter-writing.
Liberal policies were supposed to cause hyperinflation, so low measured inflation must reflect statistical fraud; the threat of climate change implies the need for public action, so global warming must be a gigantic scientific hoax.
Trying to control short-term inflation with interest rates alone is like trying to eat Chinese food with only one chopstick.For these reasons, even if the MPC's actions succeed in keeping inflation on average at its 2.5% target, you would expect significant fluctuations around that target in the measured inflation figures.
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But what if you are measuring inflation or life expectancy?
The government's Producer Price Index measures inflation before it reaches the consumer.
The Consumer Price Index, which measures inflation, rose 3.9percentt in February compared with same period in 2004.
PNC's index largely mirrors the annual federal Consumer Price Index, which the Bureau of Statistics prepares to measure inflation.
The Producer Price Index, which measures inflation pressures before they reach consumers, dipped an expected 0.3percentt last month.
But we can measure inflation expectations with the help of the index-linked bond market or TIPS.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com