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According to NOAA, inflated wind speed is "the true wind speed (in knots) adjusted to improve forecasts of higher wind speeds. Wind speeds greater than the mean wind speed observed are increased, and wind speeds less than the mean are decreased."

From what I understand METARs do not use inflated wind speed as they are a measure of actual wind speed whereas TAFs, etc are forecasts of wind speed so are probability distributions, but instead of taking the mean of those probability distributions (minimize RMS error) NOAA is doing something else. What?

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    $\begingroup$ My understanding of that statement is that they take the value the weather model produces and apply a fudge factor because they have experience the model tends to underestimate strong winds and overestimate light ones. $\endgroup$
    – Jan Hudec
    Aug 3, 2021 at 4:57
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    $\begingroup$ @JanHudec: Confirmed in this thesis. $\endgroup$
    – mins
    Aug 3, 2021 at 13:35

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