Cleveland Fed: 10 year inflation expectations 1.53%

Here we report what the Fed is saying. You already know that we think the CPI is a flawed measure. The biggest offender is "Owner Equivalent Rent", which does not take into account housing prices, which is a huge mistake.

The Cleveland Fed has seen inflation falling, as we spiral down to a Japanese style defllation. The only thing that will pull us out is a reduction in spending.
Via Cleveland Fed
The Federal Reserve Bank of Cleveland reports that its latest estimate of 10-year expected inflation is 1.53 percent. In other words, the public currently expects the inflation rate to be less than 2 percent on average over the next decade.

The Cleveland Fed’s estimate of inflation expectations is based on a model that combines information from a number of sources to address the shortcomings of other, commonly used measures, such as the "break-even" rate derived from Treasury inflation protected securities (TIPS) or survey-based estimates. The Cleveland Fed model can produce estimates for many time horizons, and it isolates not only inflation expectations, but several other interesting variables, such as the real interest rate and the inflation risk premium.


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