text: In her opening statement, Chair Yellen said “Core inflation…has been little changed in recent months at about 1-3/4 percent.” PCEPILFE, the US Fed’s preferred measure, was at 1.7% in January, unchanged from December. However, if one looks at a more current measure of inflation, the annualized three-month rate of change, it almost doubled from 1.1% in December to 1.9% in January. So the core inflation data really also support the case for an interest rate increase. The PCEPILFE inflation rate was lower or equal to the corresponding rate for CPIX, the Bank of Canada’s operational guide until this year, from June 2014 to September 2016. Since then it has been at the same level or higher. The US Fed’s preferred core inflation measure is now showing a higher inflation rate than that of any other preferred inflation measure of a G-7 central bank.