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The Federal Reserve, as a key element in its monetary policy, uses a 2% target inflation rate to determine if the federal funds rate needs to be increased. The purpose of this study is to evaluate long, intermediate, and short term trends in inflation to determine if the inflation policy objective has been reached. My inflation metric is Personal Consumption Expenditure (PCE) and the period of analysis is 2001-20015. I develop linear trend equations for both PCE and PCE less food and energy using the b coefficients from the regressions as a proxy for the PCE inflation rate. Out of sample forecasts are made for 2015 and the first couple of months in 2016.

Publication Date


Project Designation

Independent Research

Primary Advisor

Trevor C Collier

Primary Advisor's Department

Economics & Finance


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Inflation Trends in Personal Consumption Expenditures, 2001-2015