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The Likelihood of 2 Percent Inflation in the Next Three Years

Author

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  • Ellis W. Tallman
  • Saeed Zaman

Abstract

This Commentary examines inflation forecasts generated from a range of statistical models that historically have performed well at forecasting inflation. For each model, we look at the most likely future forecast path and the distribution of forecasts around that path. We show that the models project generally rising inflation, but, in contrast to other forecasts, five out of six models assign a less than 50 percent probability to inflation?s being 2 percent or higher over the next three years.

Suggested Citation

  • Ellis W. Tallman & Saeed Zaman, 2016. "The Likelihood of 2 Percent Inflation in the Next Three Years," Economic Commentary, Federal Reserve Bank of Cleveland, issue November.
    • Handle: RePEc:fip:fedcec:00059
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    File URL: https://www.clevelandfed.org/newsroom-and-events/publications/economic-commentary/2016-economic-commentaries/ec-201614-likelihood-of-2-percent-inflation-next-3-years.aspx
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    Keywords

    forecasts; inflation; models;
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