CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

To achieve its goal of price stability, the Federal Reserve uses as its operational goal the ______ and ______ set an official and formal target for the inflation rate.
A. core CPI; has
B. PCE; has
C. CPI; has
Explanation: The Fed stopped using CPI and instead is using PCE (Personal Consumption Expenditures). It has a 2% target rate.

User Contributed Comments 3

User Comment
Dannyl They used to not setting an explicit inflation target since U.S. monetary policy focused on economic growth and achieving fully employment, along with containing inflation. Other countries who set an inflation target state price stability as the primary objective in monetary policy.
mdlofmn On Jan 25th, 2012, the fed announced they will no longer use core CPI.
houstcarr 1. the fed doesn't reference CPI for their inflation measure, they use the PCE index. 2. they don't use core PCE, the just use straight headline PCE. 3. they explicitly target 2%
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