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look at this screenshot right here. Hey take a look at this

look at the data for example. So let's just look at take a

the Fed to do soon so yeah guys that's it for this lesson I

this data very important because we've got to understand

detail but yeah so how does this relate to inflation data

hope you understood everything and yeah it's just a little

together with monetary policy with everything. If you're in

cycle so this is something that we're going to explore in more

cheaper prices but you're also going to see a loss of jobs.

what we actually do. So guys that's it for this lesson. Take

introduction into starting to understand what Forex Factory

where we are so where the Fed are in terms of the market

green and then they think buy or sell. And that that is not

example right here. See if the data is just simply red or

is because what a lot of retail traders do particularly is they

all in consideration for later on in the course. Um all of

want to promote inflationary conditions. To get the economy

it means that prices of things are getting cheaper but the

with the money supply they say it's transitory this eventually

inflationary conditions because what this mean lower inflation

doesn't happen because of the inflation but everything comes

at the moment. So at the moment we just got some we just got

their money supply so it's coming to a point right now

understanding inflation year on year, quarter on quarter and

for. Usually they want to see a two percent growth in inflation

inflation. The effect that that will have is they'll start to

reading. Let's just take a look at what's going on in the world

4% goal. Uh not goal but a result. This as you can tell is

Now these things are not it's not the job unemployment thing

everything but of course one of the biggest reasons right now

very inflationary in normal economic times you won't be

to start moving to see that economic activity. So keep this

some CPI readings for the whole year. It was year on year.

inflation that means that they may start to promote

effect on that as well is you're not only going to see

that we are seeing and therefore what can we expect

quite a few and also when it gets to that year on year

throughout the year. So what happens if the Fed see higher

could become permanent if they don't do anything with their

the month on month. If they see a steady increase throughout

goals of the Fed. Every year the goal the Fed will set out

growth in inflation this is sustainable and is one of the

also what the Fed are going to do with their monetary policies

Fed analysis. So how do the Fed actually respond to this data?

very deflationary times you you're going to see the Fed

so-called PCE. They use this data as a source of

policies so how about the opposite what if they see lower

say it's temporary because of COVID and what they've done

need to understand the effect that it has on the market and

both CPI and PPI but more importantly the core CPI or the

where we have to promote some deflationary conditions

some parameters and some targets that they want to aim

understand this as a concept for now and then we'll

CPI reading they're not exactly going to do this but they need

promote deflationary conditions. Now because of one

the months and eventually showing around the 2 percent

with interest rates everything like that. So the Fed monitor

called the core CPI but also known as the PCE index personal

to the short term fluctuations seen in CPI data released of

inflation due to the supply and the demand factors. Um whereas

what do the Fed use instead of the normal CPI it's something

And this is the most important thing because yes understanding

what happened with CPI and how much it grew is okay. But we

obviously get into the numbers later on. So let's look at some

coming either in the second or the third section. So just

is essentially what the Fed prefer to use. Now this this is

something that I'm going to get into more detail in my course

this the PCE index actually gets rid of that. So PCE index

said if there was a drought for example for wheat maybe for the

is because of COVID because of what the Fed had to do with

otherwise this what they call transitory inflation so they

getting this unless there's geopolitical reasons and

Rather than the 2% goal that they were looking for. We got a

promotes economic activity to grow. Cos of course you need

massive fluctuations in the data released. Showing

natural disasters and certain geopolitical events that make

wheat for as an example if we look at wheat if there was a

saw a massive shift in the market you know these

percentage points at the end of the day because this is just

market most recently in one of the CPI releases I believe it

that I need to introduce to you called the core CPI. So the

also year on year. Like I said there are also yearly readings

are produced monthly for the month on month readings. Um but

consumption expenditures instead because it is not prone

next few months you might get a massive massive increase in

usual CPI data that we see such as over here. You're going to

particularly in the Fed fund rate video. I believe that's

therefore you might get massive fluctuations in the price so

course you've got stand with the normal CPI data that is

released it's going to be short term fluctuation. So like I

month. This is the more important reading that we get.

drought then of course the supply is going to be affected

single month until that year reading so these sets of data

certain commodities very volatile. As an example if

going up to 1% inflation for that month would be a lot and

economy and also to the consumers. So there's something

that inflation but any more than that can be harmful to the

means. So typically you have a prediction percentage increase.

So what it means is if we expect CPI to come out what

misleading results. Now these fluctuations can be caused by

that's where you see start seeing massive swings in the

The normal CPI includes food and energy which can cause

aim for inflation of 2% a year. Because this is healthy it

you've also got other readings such as quarter on quarter and

that the Fed will use to monitor inflation in comparison

and then they're predicted in the central area. So they're

to their goals of 2% a year. So if you remember back to the

few decimal percentage points. So if it's for example 0. 1%

inflationary and it's 0. 9% or even more than that. You know

number so if it's massive in this case would would be just a

percentage increase price will usually so if it's 0. 5% is the

was also expected to be 0. 7% or something like that where in

by 0. 5 percent. Now typically if you have a prediction

fact it was actually 0. 3% lower than expected and then we

going to predict that CPI for this month is going to increase

they'll put the previous I believe on the right hand side

realize that CPI month on month and then also core CPI month on

instead of 0. 5 or if it's the other way round where it's very

inflation lesson the Fed and other central banks they always

estimate for the next month but you see a massively fluctuating

the monthly data is really going to add up you know every

understand what the impact of it is. So you're not just

indicators they have economic research. What they will do is

You're actually going to understand what it actually

they're going to do is based on you know the different type of

looking at that data and seeing if it's red, green or neutral.

price index it doesn't cover services whereas PPI covers

this data on Forex factory trade and economics and any

data that you may see percentages and stuff and also

produce their products that's also going to increase in

other FX sources so these are the main This Forex factory is

a CPI and PPI and where to find it as well so you can review

buying it and then here it's the inflation for the people

when the data's coming out. So the main thing is you must

that are selling it. So of course as inflation increases

price. And that has an adverse effect on on the CPI because of

going to be the main place that you look at for sort of quick

main two parts that we look at the WPI which is the wholesale

goods and services hence why we don't use the WPI as much but

course this is the stage just before. Um so now these are the

yeah so let's look at a little overview of how we actually use

the goods that they buy to actually manufacture and

of course it's always good to know what it actually is and

the world right so all of this is based on sort of estimates

because you can't you don't have one average man in the in

can tell from the this is inflation for the sellers of

like that there are some arguments that would say the

producers of intermediate goods and services over time as you

the products. So here CPI measures the people that are

price index is a family of indexes that measures the

average change in selling prices received by domestic

CPI data isn't going to be the most accurate piece of data

of what they expect everyone to be using then the producer

course this includes transportation food everything

in this case it would be America for example so of

consumer needs. They include transportation, food and

CPI. The CPI is a measure that examines a weighted average of

prices of a basket of goods and services which are of primary

inflation. So to measure inflation we use a mainly three

medical care. So what this is is an average for understanding

parameters. And there's two so more premium ones that we look

price index but I explain why we don't use it as much. So the

the producer price index. There's also the wholesale

at. The main ones are going to be the consumer price index and

central banks can actually do about this. So measures of

the basic needs and purchases of the normal consumer around

what the inflation is like in the economy and what the Fed or

inflation and the impact it has on the economy. But now how do

we actually measure this and get a reading to understand

course in the previous lessons we just looked at obviously

care and I'll see you in the next video.

Yes guys welcome to the next video. So in this one we're

going to be looking at measures of inflation rates. So of