Warsh backs trimmed-inflation gauge, but analysts warn of policy risk
Senate testimony shows Kevin Warsh backing a trimmed-mean inflation measure to capture underlying inflation, excluding one-off shocks. Bank of America cautions that switching to this gauge could let energy and food shocks matter more, possibly raising the reading and pushing the Fed toward a hawkish stance. If trimmed inflation outpaces core PCE in the future, Warsh may have to defend his approach to preserve credibility, even as critics argue the move aligns with Trump interests.