Nick Timiraos: Fed chairman considers focusing on trimmed inflation measures

Nick Timiraos: Fed chairman considers focusing on trimmed inflation measures
Fed chairman backs trimmed inflation measure

Nick Timiraos, chief economics correspondent at Wall Street Journal, reports that Fed Chairman Kevin Warsh is encouraging greater attention to inflation indicators that remove the most extreme monthly price changes.

Several variations of these 'trimmed' inflation measures exist, with the Dallas Fed's version cited as the most widely used. This measure stood at 2.3 percent in April, compared to 3.3 percent for the core personal consumption expenditures index.

Forecasters expected April core PCE inflation to rise to 3.3 percent, the highest since November 2023, according to prior estimates by Nick Timiraos. Timiraos has also reported that some analysts anticipate substantial disinflation after a few more strong inflation numbers, noting the role of fiscal policy in those expectations (full report). These perspectives provide context for the Fed’s focus on alternative inflation measures.

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