US: Video – Fed Staff Judgmental and FOMC Forecast Errors

Given the number of inquiries we have received, we have prepared a video explaining the Fed staff’s judgmental forecast: what it is, how it is constructed, and why the concept of “underlying inflation” plays a central role. We also discuss how underlying inflation is estimated and, importantly, why—based on our analysis and model estimates—we believe the Fed staff (and, by extension, the FOMC) continues to underestimate inflation at the 18- to 24-month horizon.