Fed chair Kevin Warsh has expressed a preference for the trimmed-mean PCE, which
excludes extreme price moves before calculating a weighted average. Boston
College economist Brian Bethune said the trimmed-mean PCE is not the most
reliable gauge: it performs best when inflation shocks mirror the 2009–2019
pre-pandemic period, when positive and negative shocks were balanced. When price
shocks are predominantly upward — supply disruptions, tariffs, oil-price spikes
or large one-off events such as the World Cup — the metric tends to understate
inflation, he said, and he hopes someone will challenge Warsh on the point.
Regardless of the chosen gauge, US inflation has remained above the Fed's 2%
target since spring 2021.
