Go to the St. Louis Federal Reserve FRED database, and find data on the personal consumption expenditure price index (PCECTPI). Convert the Units setting to “Percent Change from Year Ago” and download the data. Beginning in January 2012, the Fed formally announced a 2% inflation goal over the “longer term.”

a) Calculate the average inflation rate over the last four and the last eight quarters of data available. How does the rate compare to the 2% inflation goal?

b) What, if anything, does your answer to part (a) imply about Federal Reserve credibility?