BIS paper with New York Fed unveils new measure of underlying inflation
Measure draws on wide data set including asset prices and real variables
The Bank for International Settlements (BIS) has unveiled a new measure for underlying inflation that combines a wide range of data in real-time, in a working paper authored by economists from Basel and New York.
In the paper, Marlene Amstad of the BIS and Simon Potter and Robert Rich of the New York Fed present an ‘underlying inflation gauge' that summarises the information contained in a wide data set – including asset prices and real variables – in a single number.
The paper – The FRBNY Staff Underlying Inflation Gauge: UIG – says that one "attractive" feature of the measure is that it can be updated on a daily basis, which allows policy-makers to closely monitor any changes.
"This capability can be very useful when large and sudden economic fluctuations occur, as at the end of 2008," the authors say.
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