Such measures help central banks to distinguish in real time the “signal” on medium-term inflationary pressure contained in inflation data from the “noise” stemming from temporary or idiosyncratic factors. The measures of median inflation presented in Chart 5 give an indication of how broad-based movements in inflation are.
See Ehrmann, M., Ferrucci, G., Lenza, M. and O’Brien, D. (2018), “Measures of underlying inflation for the euro area”, Economic Bulletin, Issue 4, ECB. 18. Second-round effects describe a situation where a temporary deviation of inflation from target becomes entrenched in wage and price-setting behaviour and then becomes persistent. 19.