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The Fed's preferred inflation measure showed an annual rise in prices of just 0.7% in April (or 1.05% excluding food and energy).
Since 2008, year-over-year total inflation as measured by the Personal Consumption Expenditures Price Index (PCE) the Fed's preferred inflation measure, has averaged just 1.4 per cent, well below its 2 per cent target.
The central bankers' preferred inflation gauge, the deflator for personal consumption expenditures, excluding the volatile categories of fuel and food, rose at an annual rate of 2.3% in the third quarter, down from 2.7% in the second quarter.Slower growth and easier inflation: so far, so good, the Fed may think.
Meanwhile, personal consumption expenditures, the Federal Reserve's preferred inflation barometer, were up 0.8%, but PCE chain prices were up just 0.4%, and only 0.1% when excluding food and energy, which was in line with April's reading.
The Fed's preferred inflation measure, the personal consumption expenditures price index, excluding food and energy, rose at an unrevised annual rate of 0.8percentt.
This measure is still below 2%, the Fed's preferred inflation rate, and thus too low.
Similar(40)
The central bank said it prefers inflation of 2%, also the target (or the midpoint in a target range) of the British, Canadian, Swedish and Israeli central banks.Mr Bernanke characterised these steps as a way to make monetary policy more transparent and predictable, and therefore more effective.
The distaste for inflation is such that a 1996 study (titled, aptly, "Why Do People Dislike Inflation?"), by the Yale economist Robert Shiller, found that, in countries around the world, sizable majorities said that they would prefer low inflation and high unemployment to high inflation and low unemployment, even if that meant that millions of extra people would go without work.
Although his predecessor rejected inflation targeting, Bernanke preferred a stated inflation objective, which he believed would bring about economic growth and stability.
If net creditors prefer low inflation (and if central banks are responsive to public preferences) then older societies will have lower inflation rates generally.
The Fed would prefer annual inflation to run closer to 2 percent, diminishing the risk of outright deflation, or a general fall in the level of prices, which can paralyze economic activity as buyers wait for lower prices.
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