Warsh Launches 5 Fed Task Forces to Recast Inflation Metrics as Price Gauges Diverge
Updated
Updated · CNBC · Jul 1
Warsh Launches 5 Fed Task Forces to Recast Inflation Metrics as Price Gauges Diverge
3 articles · Updated · CNBC · Jul 1
Summary
Five Fed task forces will review how the central bank measures inflation and sets policy triggers, with Kevin Warsh saying the Fed should rely less on lagged government surveys and more on real-time data within 9 to 12 months.
The push reflects sharply different inflation signals: May CPI showed 4.2% headline and 2.9% core inflation, while the Fed’s preferred PCE gauge put them at 4.1% and 3.4%.
Alternative measures paint a wider range, from the Dallas Fed’s 2.4% trimmed mean to Atlanta Fed readings of 3.1% sticky and 7% flexible inflation, while private gauge Truflation stands at 1.75%.
Those gaps matter for rates because some indicators suggest inflation remains far above the Fed’s 2% goal, while market measures such as the five-year breakeven rate near 2.26% imply easing longer-term pressure.
Warsh’s review extends his broader rethink of Fed policymaking, announced earlier in Sintra, as the central bank grapples with war-driven energy shocks and doubts about traditional forward guidance.