Warsh’s Preferred Inflation Gauge Cools to 2.3% as Core PCE Hits 3.3%
Updated
Updated · Reuters · May 28
Warsh’s Preferred Inflation Gauge Cools to 2.3% as Core PCE Hits 3.3%
2 articles · Updated · Reuters · May 28
Summary
Dallas Fed trimmed mean inflation slowed to 2.3% in April from 2.4%, reinforcing Fed Chair Kevin Warsh’s view that price pressures are easing.
Dallas Fed economist Tyler Atkinson said the gauge is likely understating inflation because Trump-era tariffs lifted prices across a broad swath of goods, reversing the measure’s usual statistical skew.
Core PCE inflation instead rose 3.3% year over year in April—the fastest since 2023—backing policymakers such as Lisa Cook who say inflation is moving the wrong way.
Warsh told lawmakers last month he prefers trimmed-average measures, but analysts warned the Dallas gauge also gave a false cool signal during the post-pandemic inflation surge.
Dallas Fed does not plan to change the methodology, saying the distortion should fade if tariff-driven price pressures recede in coming months.