“Fed officials have for years cited “core inflation,” a measure that excludes food and energy prices. That is because core inflation tends to be a useful predictor of inflation over a couple of years, which they call the medium term, a period that is key to monetary-policy decisions. But this focus has drawn criticism that Fed officials aren’t facing economic reality, as if they don’t eat or drive.
Now, Mr. Bernanke is taking another tack in his public communications. In two days of testimony on Capitol Hill earlier this month, the Fed chairman never uttered the words “core inflation” while explaining the central bank’s aims and policies. Instead of citing a specific measure, he emphasized the Fed’s time frame. “Inflation can vary considerably in the short run,” he told the House Financial Services Committee. “Our objective is to hit low and stable inflation in the medium term.”” Read more.
“To Avert Criticism, Fed Avoids Saying ‘Core'”
Sudeep Reddy and Michael S. Derby
Wall Street Journal, March 13, 2011.