\n \u201cThe measures I prefer are looking at things that are called trimmed averages,\u201d he said during his confirmation hearing in April. \u201cWhat I\u2019m most interested in is what\u2019s the underlying inflation rate, not what\u2019s the one-time change in prices because of a change in geopolitics or a change in beef.\u201d\n <\/p>\n
\n Those \u201ctrimmed-mean averages\u201d are alternative inflation gauges released by regional Fed banks that can give investors and policymakers a better sense of inflation\u2019s breadth and direction.\n <\/p>\n
\n Warsh presides over his first policy meeting as chair next week. Investors now see the Fed potentially raising interest rates this year because of an Iran-war-fueled pickup in inflation. But if Warsh persuades his fellow policymakers to weigh different inflation measures instead, the bank could keep rates where they are \u2014 or even lower them \u2014 risking a bigger jump in price increases.\n <\/p>\n
\n The Federal Reserve Bank of Dallas produces one trimmed-mean gauge that shows annual inflation of 2.3% in April. A similar estimate from the Cleveland Fed puts annual inflation in May at 2.9%. In contrast, the May CPI came in at 4.2%; while the Producer Price Index, which measures inflation at the factory gate and was released Thursday, reached a more-than-three-year high of 6.5% in May<\/a>. The PPI potentially foreshadows what may be in line for consumers.\n <\/p>\n \n In the past, some of these trimmed-mean measures have had stretches of out-predicting inflation\u2019s future path<\/a> over CPI and other gauges.\n <\/p>\n \n But some of Warsh\u2019s colleagues warn trimmed-mean averages aren\u2019t accurately capturing what\u2019s really happening at the moment. CNN has reached out to the Fed for comment.\n <\/p>\n \n And some economists say Warsh\u2019s arguments are unconvincing.\n <\/p>\n \n \u201cFed Chair Kevin Warsh has declared himself a fan of trimmed mean estimates,\u201d said Richard de Chazal, a macro analyst at William Blair. \u201cBut the reality is that inflation is now pointing firmly higher.\u201d\n <\/p>\n Pros and cons<\/p>\n \n The Fed already closely watches core inflation, which excludes volatile food and energy prices. The Fed relies on the Personal Consumption Expenditures price index, rather than CPI, as it offers a more dynamic and comprehensive view of prices. Like CPI, the PCE inflation rate has trended higher since February, reaching 3.8% in April<\/a>. May PCE data is due later this month.\n <\/p>\n \n Warsh argues that officials should take filtering noisy data a step further.\n <\/p>\n \n The trimmed-mean rate removes, or trims, the most extreme outliers from core inflation before averaging to smooth out more volatility. The Cleveland and Dallas Fed banks calculate their trimmed-mean rate differently, meaning they exclude different outliers.\n <\/p>\n \n \u201cTrimmed mean is generally a better predictor of where inflation is headed,\u201d which can help the Fed chart a path for interest rates, the Brookings Institution said in an analysis from April<\/a>.\n <\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/06\/gettyimages-2277132263.jpg\")
<\/p>\n