Such a revision would be in line with current Board staff estimates, which indicate that the wedge has declined in recent years and now stands at about 30 basis points. 14  Inflation compensation – the difference between nominal and indexed Treasury yields – has recently been about 1/2 percent.
However, two adjustments are necessary to translate inflation compensation into an estimate of expected long-term inflation on a PCE price basis. First, because the difference between nominal and indexed yields equals the sum of inflation expectations and an inflation term premium, we must subtract an estimate of the premium.