Meet the Trimmed Mean Inflation Gauge … A Measure to Keep Watch

With the FOMC (Federal Open Market Committee) led by Jerome Powell and company at their most recent meeting, made the following comments:

On price stability, the FOMC adjusted its strategy for achieving its longer-run inflation goal of 2 percent by noting that it “seeks to achieve inflation that averages 2 percent over time.” To this end, the revised statement states that “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”

The updates to the strategy statement explicitly acknowledge the challenges for monetary policy posed by a persistently low interest rate environment. Here in the United States and around the world, monetary policy interest rates are more likely to be constrained by their effective lower-bound than in the past.

Let’s Decipher these Comments and Bring On the Tracking

The comments above, were understood by many/most on Wall Street to mean rates will be allowed to stay lower for longer and the 2% inflation rate is not a hard line number….

The following is the Trimmed Mean Inflation Rate completed by our very own Dallas Federal Reserve, just down the street from us!

It is basically taking the far outliers in any report out and calculating the number. This rate is one of the most watched inflation numbers by the FOMC!

Here are the actual numbers- watch that 2% number!

When rates go up, it is a headwind for Capital Markets …

Let’s keep a watchful eye on this… we are tracking you Mr. Trimmed Mean.

John A. Kvale CFA, CFP

Founder of J.K. Financial, Inc.

A Dallas Texas based fee only

Financial Planning Total Wealth

Management firm.



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