Federal Reserve Staff Re-evaluates Inflation Forecast Accuracy Since 2019
Washington D.C. – The Federal Reserve Board’s staff has released a comprehensive retrospective analysis examining the accuracy of their inflation forecasts since 2019. Published on August 22, 2025, at 2:00 PM Eastern Time on the federalreserve.gov website, this paper offers valuable insights into the challenges and successes of predicting inflationary trends in a rapidly evolving economic landscape.
The FEDS Paper, titled “Retrospective on the Federal Reserve Board Staff’s Inflation Forecast Errors since 2019,” delves into the methodologies employed by the Board’s economists and scrutinizes the deviations between their predictions and actual inflation outcomes. This self-assessment is a crucial element of the Federal Reserve’s commitment to transparency and continuous improvement in its economic modeling and forecasting capabilities.
The period since 2019 has been marked by significant economic disruptions, including the COVID-19 pandemic, supply chain challenges, and subsequent fiscal and monetary policy responses. These extraordinary events have undoubtedly tested the precision of economic forecasting models across the globe. The Federal Reserve’s staff, in this paper, candidly addresses how these unforeseen circumstances may have impacted their inflation projections.
Key areas likely explored within the paper include:
- Analysis of Forecast Deviations: The report is expected to detail the magnitude and direction of forecast errors for key inflation measures. This could involve examining discrepancies for headline inflation, core inflation (excluding food and energy), and potentially specific components of the Consumer Price Index (CPI) or Personal Consumption Expenditures (PCE) price index.
- Drivers of Inflationary Surprises: The staff will likely identify the specific factors that contributed to forecast errors. This might encompass analyses of the unexpected persistence of supply chain disruptions, the impact of robust consumer demand fueled by stimulus measures, shifts in labor market dynamics, and the pass-through of commodity price shocks.
- Model Performance and Limitations: The retrospective is a valuable opportunity to evaluate the performance of the economic models used by the Federal Reserve staff. It may highlight areas where models proved adept at capturing certain economic dynamics and identify limitations that led to inaccuracies.
- Methodological Adjustments: The paper could also shed light on any adjustments or refinements made to forecasting methodologies in response to observed forecast errors, demonstrating a commitment to learning and adapting.
- Implications for Future Forecasting: Ultimately, the insights gained from this retrospective are intended to inform and improve the Federal Reserve’s future inflation forecasting efforts, leading to more robust and reliable economic predictions.
The publication of this detailed analysis underscores the Federal Reserve’s dedication to understanding the complex forces that shape inflation. By openly examining their forecasting record, the Board’s staff aims to enhance the precision of their economic outlook, which is fundamental to the formulation of effective monetary policy aimed at achieving price stability and maximum employment. Economists, policymakers, and the public alike will find this retrospective a valuable resource for understanding the challenges of forecasting in dynamic economic environments and for appreciating the continuous efforts to refine economic analysis at the Federal Reserve.
FEDS Paper: Retrospective on the Federal Reserve Board Staff’s Inflation Forecast Errors since 2019
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