{"id":342,"date":"2026-05-28T22:08:47","date_gmt":"2026-05-28T22:08:47","guid":{"rendered":"https:\/\/reliablemovingcrews.com\/?p=342"},"modified":"2026-05-28T22:08:47","modified_gmt":"2026-05-28T22:08:47","slug":"fed-chair-warshs-preferred-inflation-measure-is-cooling-a-big-pinch-of-salt-is-advised","status":"publish","type":"post","link":"https:\/\/reliablemovingcrews.com\/?p=342","title":{"rendered":"Fed Chair Warsh&#8217;s preferred inflation measure is cooling. A big pinch of salt is advised"},"content":{"rendered":"<div><div><div><ul><li>Summary<\/li><\/ul><\/div><div><\/div><\/div><div>May 28 (Reuters) &#8211; One of new Federal \u200bReserve Chairman Kevin Warsh&#8217;s favorite inflation measures came in cool again on Thursday, offering evidence for his belief that inflation is improving and against \u200cthe view of a growing number of other policymakers that interest rate hikes may be needed to tamp down rising price pressures.<\/div><div>Year-over-year inflation by the Dallas Fed&#8217;s trimmed mean measure &#8211; the best-known of what Warsh referred to in his confirmation hearing as &#8220;trimmed averages&#8221; for inflation &#8211; was 2.3% in April, the Fed bank reported on Wednesday, down from 2.4% in March.<\/div><div>Trouble is, the publishers say that it is \u200bunderstating the underlying inflation trend right now.<\/div><div>&#8220;You would want to be cautious on getting too much optimism from the level of the trimmed mean,&#8221; Dallas Fed \u200beconomist Tyler Atkinson explained in an interview on Wednesday ahead of the latest data release.<\/div><div>In normal times, he said, the gauge works \u2060well to filter out the noise from outlying components, which in April included surging prices for gasoline, airfare and jewelry, and a drop in the prices for poultry, \u200bhousehold linens and haircuts. It trims off the fastest-rising prices and fastest-falling prices, leaving a more representative middle set of price changes that typically serves as a good indicator \u200bof where inflation is heading.<\/div><div>Items with falling or very slow-rising prices typically outnumber items with steeply rising prices, so Dallas Fed researchers compensate by lopping off more high-inflation items than low-inflation ones.<\/div><div>But lately &#8211; because tariffs imposed by President Donald Trump over the last year have pushed up prices for a large chunk of goods &#8211; the usual &#8220;skew&#8221; is reversed. That means that trimming the top 31% and the \u200bbottom 24% of items in the index, as the gauge&#8217;s methodology calls for, ends up pushing the gauge downward, understating true price pressures, Atkinson explained.<\/div><div>This has happened before, \u200bnotably in the post-pandemic inflation surge when the Dallas Fed&#8217;s trimmed mean measure of inflation gave a false signal suggesting inflation would be cooler than it turned out to be.<\/div><div>By contrast, the \u200cmeasure Fed policymakers \u2060have been using for some time to gauge underlying price pressures &#8211; the core personal consumption expenditures price index excluding volatile energy and food prices &#8211; rose 3.3% in the 12 months through April, the Commerce Department&#8217;s Bureau of Economic Analysis said on Thursday.<\/div><div>That is the fastest since 2023 and is, as Fed Governor Lisa Cook said on Wednesday, &#8220;clearly moving in the wrong direction.&#8221;<\/div><div>At his confirmation hearing last month, though, Warsh told lawmakers he prefers to take his signal from &#8220;trimmed averages&#8221; and, as he told Democratic Senator Catherine Cortez Masto, \u200bhe believes inflation &#8220;has improved somewhat in the \u200blast year.&#8221;<\/div><div>Analysts are skeptical.<\/div><div>&#8220;We think it \u2060is difficult to argue that the disinflation signaled by the trimmed mean is real,&#8221; wrote Standard Chartered Bank analysts Steve Englander and Dan Pan, noting not just the Dallas Fed measure&#8217;s statistical properties but also that it historically has not been as good at \u200bpredicting future inflation as core PCE.<\/div><div>The Dallas Fed has no plans to change its methodology, Atkinson said. If tariff-induced price \u200bpressures recede as expected, the \u2060problem should cure itself in coming months. Until then, other guides to underlying inflation may merit more attention.<\/div><div>In a post on X on Thursday, Harvard economist Jason Furman noted that the trimmed mean reading is not the only muted measurement of inflation lately. Cleveland Fed&#8217;s separate measure of median PCE inflation has also declined in recent months, though at 2.8% is \u2060a bit higher \u200bthan the Dallas Fed measure.<\/div><div>Of Warsh&#8217;s preferred measure, he said, there is nothing to say it is \u200bunreasonable.<\/div><div>&#8220;The worry is that it was picked for ex post reasons,&#8221; he said, adding he &#8220;would rather the Fed did more of a study of the best signal extraction, proposed something, and stuck with it.&#8221;<\/div><div><address><div><div><noscript>\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"120\" height=\"120\" alt=\"Ann Saphir\" class=\"wp-image-341\" src=\"https:\/\/reliablemovingcrews.com\/wp-content\/uploads\/2026\/05\/f8f16a393b175f98f262dfdf404fb206.avif\"\/><\/figure>\n<\/noscript><\/div><div>Ann Saphir<\/div><\/div><div><ul><li><span><div><svg><title>Email<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>X<\/title><\/svg><\/div><\/span><\/li><li><span><div><svg><title>Linkedin<\/title><\/svg><\/div><\/span><\/li><\/ul><\/div><\/address><\/div><\/div><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=339\">New York state budget includes New York City tax on high-end second homes<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=336\">US imposes fresh sanctions on Iran\u2019s military oil sales, Treasury says<\/a><\/p><p>Read more <a href=\"https:\/\/reliablemovingcrews.com\/?p=334\">Israel carries out strike on Beirut suburbs, first near capital in weeks<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>One of the Fed chair&#8217;s favorite inflation measures came in cool again, offering evidence for his belief inflation is improving and against the view of a growing number of other policymakers \u200cthat interest rate hikes may be needed to tamp down rising price pressures.<\/p>\n","protected":false},"author":1,"featured_media":340,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-342","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Fed Chair Warsh&#039;s preferred inflation measure is cooling. 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