Core inflation is a poor forecaster of future price levels, says Brazilian research

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A Central Bank of Brazil paper published on Thursday says core inflation is no better than a simple moving average of headline inflation and forecasting future levels.

Tito Nícias, the paper's author, uses data on inflation from the US, Canada and Brazil to measure the directional forecast accuracy of core inflation in signalling future levels of headline inflation. The author says that while many economists read recent increases in core inflation as a reliable sign that headline inflation will

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