Fed Finds New Reason for Confidence in Obscure Inflation Gauge
- Market-based measure shows inflation closer to the Fed’s goal
- Officials have flagged role of imputed prices in recent upturn
A customer outside a departrment store in Palo Alto, California, US.
Photographer: David Paul Morris/BloombergThis article is for subscribers only.
Top Federal Reserve officials — including Chair Jerome Powell — are increasingly pointing to an obscure price gauge as a reason to maintain confidence in their outlook: “market-based” inflation.
The metric excludes a range of services where data-collectors can’t directly measure prices and have to estimate them instead. The result is a different inflation picture in recent months. Whereas the central bank’s preferred underlying inflation gauge accelerated to 2.8% in November, the market-based measure has been more or less flat at 2.4% since May.