This approach also sidesteps distortions in the monthly data associated with residual seasonality; these distortions are likely to hold down month-to-month changes in prices over the balance of the year (see Peneva, 2014). That said, 12-month rates of inflation will continue to be held down through early 2018 by the unusually weak monthly readings on price changes recorded in early 2017.
-5of the latest inflation projections submitted by FOMC participants that I showed previously. The pertinent feature of this figure is the blue shaded region around the red line, which shows a 70 percent confidence interval around FOMC participants’ median outlook. The width of this region reflects the average accuracy of inflation projections made by private and government forecasters over the past 20 years.