Dunsmuir and Schneider write: “The Fed’s preferred measure of underlying inflation has retreated to 1.5 per cent, from 1.8 per cent earlier this year, and has run below the central bank’s 2 per cent target for more than five years.” This is false. The US Fed targets the personal consumption expenditures price index (PCEPI). It was at 2.2% in February, but has since dropped to 1.7% in April. Except for February 2017 it has only exceeded its two percent target from January to April 2012, i.e. in the month the US Fed officially adopted an inflation target rate with the PCEPI as its indicator. Dunsmuir and Schneider are referencing the PCEPI excluding food and energy (PCEPILFE), a core PCEPI measure, and the preferred one of the US Fed, although they also follow a trimmed mean core measure quite closely. It did fall from an inflation rate of 1.8% in January and February to 1.5% in April and has never been at or above the two percent target from January 2012 forward.

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