henrywillmore Dec 0704

Prediction and Control of Inflation Henry Willmore Barclays Capital October 2003

FOMC Inflation Forecast Record Forecast Errors

Forecasts Vs. Actuals 7.0

7.0

6.0

6.0

5.0

5.0

4.0

4.0

3.0

3.0

2.0

2.0

1.0

1.0 89 90 91 92 93 94 95 96 97 98 99 00 01 02 Forecast

Actual CPI/ PCE

Actual Core CPI/ PCE Source: Federal Reserve Board, Bureau of Labor Statistics, Haver Analytics.

2.5

2.5

2.0

2.0

1.5

1.5

1.0

1.0

0.5

0.5

0.0

0.0

-0.5

-0.5

-1.0

-1.0

-1.5

-1.5

-2.0

-2.0 89 90 91 92 93 94 95 96 97 98 99 00 01 02 CPI/PCE

Core CPI/PCE

Source: Federal Reserve Board, Bureau of Labor Statistics, Haver Analytics, Barclays Capital .