Kevin Warsh Pushes Trimmed-Mean Inflation Gauges Amid Highest CPI in Three Years - News and Statistics - United Kingdom News Beep

Jun 11, 2026

Last month, inflation climbed to its highest point in three years, according to fresh figures released this week. Yet newly appointed Federal Reserve Chair Kevin Warsh wants the central bank to prioritize alternative metrics.

During his April confirmation hearing, Warsh explained that he favors what are known as trimmed averages, emphasizing his interest in the underlying inflation rate rather than temporary price shifts caused by geopolitical events or changes in beef costs. These trimmed-mean averages are alternative inflation indicators published by regional Fed banks, intended to provide investors and policymakers with a clearer picture of inflation’s scope and trajectory.

Warsh is set to lead his first policy meeting as chair next week. Investors currently expect the Fed might raise interest rates this year due to an inflation surge linked to the Iran conflict. However, if Warsh persuades his colleagues to consider different inflation measures, the central bank could hold rates steady or even reduce them, potentially risking a more significant increase in prices.

The Dallas Federal Reserve Bank produces a trimmed-mean gauge showing annual inflation at 2.3% in April. A comparable estimate from the Cleveland Fed indicates annual inflation of 2.9% in May. By contrast, the May Consumer Price Index stood at 4.2%, while the Producer Price Index, released Thursday and measuring factory-gate inflation, hit a more-than-three-year high of 6.5% in May. The PPI may signal what lies ahead for consumers.

Historically, some trimmed-mean measures have occasionally outperformed CPI and other gauges in forecasting inflation’s future direction. But some of Warsh’s colleagues caution that trimmed-mean averages are not currently capturing the real situation. CNN has contacted the Fed for comment.

Certain economists remain unconvinced by Warsh’s reasoning. Richard de Chazal, a macro analyst at William Blair, noted that while Warsh has expressed support for trimmed mean estimates, inflation is now clearly trending upward.

The Fed already closely tracks core inflation, which excludes volatile food and energy prices. The central bank relies on the Personal Consumption Expenditures price index instead of CPI, as it provides a more dynamic and comprehensive view of price changes. Like CPI, the PCE inflation rate has risen since February, reaching 3.8% in April. May PCE data is expected later this month. Warsh argues that officials should go further in filtering out noisy data.

1. INTRODUCTION

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