The set of graphs below are created the same way as the graph above except that instead of using the level of inflation to create the groups, I've used the 12 -
month change in inflation.
The 12 -
month change in inflation in December was 1.7 percent.
Not exact matches
To be clear, as we saw
in 2011,
changes in oil prices could lead
inflation to blip above 2 percent for a few
months.
At two decimal places, the nominal 0.22 %
month - over-
month change in disposable income was trimmed to 0.18 % when we adjust for
inflation.
As a separate (investor - oriented) test, we relate monthly
change in expected annual
inflation to next -
month total returns for SPDR S&P 500 (SPY) and iShares Barclays 20 + Year Treasury Bond (TLT).
The Bank's quarterly survey of financial market economists suggests that near - term
inflation expectations have
changed little over recent
months, with the median forecast for
inflation over the year to June 2004 at 2.2 per cent
in November, compared with 2.3 per cent
in August.
We use the CPI series to calculate
inflation (12 -
month change in CPI).
What this means is that the percentage
change in real interest rates, three -
month T - bills less CPI - U
inflation, is projected to persist for six years.
It picks up the quick shifts
in the level of
inflation we've seen, including the
changes in price levels peaking out
in 2008 at 5.6 %, price declines of more than 2 % through the middle of last year, and the recent return of rising
inflation the last few
months.
A
change in CPI doesn't impact the
inflation accrual for a TIPS bond until two
months later.
Our expectation is that gradually higher levels of
inflation breakevens will result from firmer
inflation data
in the coming
months, while a move higher
in real rates will be virtuously tied to cyclical
changes in real growth.
The Federal Reserve (Fed) didn't
change their tune this
month, continuing to express confidence
in their 2 %
inflation target.
Market - based measures of
inflation compensation declined; most survey - based measures of longer - term
inflation expectations are little
changed, on balance,
in recent
months.
Market - based measures of
inflation compensation remain low; most survey - based measures of longer - term
inflation expectations are little
changed, on balance,
in recent
months.
Market - based measures of
inflation compensation have moved up but remain low; most survey - based measures of longer - term
inflation expectations are little
changed, on balance,
in recent
months.
Market - based measures of
inflation compensation declined further; survey - based measures of longer - term
inflation expectations are little
changed, on balance,
in recent
months.
The adjustments will be determined by multiplying $ 2,085, or the most recent
inflation adjusted amount, by the sum of all subsequent annual average percentage
changes of All Items CPI - U, before seasonal adjustment, for the 12 -
month periods ending
in December.
Though I made some technical improvements to the program at the same time, what impressed me was the
change in the forward
inflation curve since I last wrote on the topic less than a
month ago.
The composite rate of an I bond is based on two separate rates: the fixed rate, which is set at the time of purchase and remains constant for the life of the bond, and the
inflation - linked rate, which
changes every 6
months based on the
change in the CPI - U measurement.
Market - based measures of
inflation compensation have moved up considerably but still are low; most survey - based measures of longer - term
inflation expectations are little
changed, on balance,
in recent
months.
I Bonds
change their rate for new and all currently issued bonds every 6
months based on
changes in inflation while current EE Bonds keep the same rate for their lifespan.
To do this, I bonds adjust their rate every 6
months to track
changes in the level of
inflation as measured by the CPI - U.
Counting on further improvement
in the job market and rising
inflation, the Federal Reserve Open Market Committee indicated it was moving closer to raising interest rates this year, though the
changes likely won't come for a few
months...
Counting on further improvement
in the job market and rising
inflation, the Federal Reserve Open Market Committee indicated it was moving closer to raising interest rates this year, though the
changes likely won't come for a few
months, Bloomberg reports.