Inflation is the worst in three years. Kevin Warsh says that’s not the full story | CNN Business

Inflation hit its highest level in three years last month, according to fresh data released this week — but new Federal Reserve Chair Kevin Warsh wants the central bank to focus on different measures. “The measures I prefer are looking at things that are called trimmed averages,” he said during his confirmation hearing in April. “What I’m most interested in is what’s the underlying inflation rate, not what’s the one-time change in prices because of a change in geopolitics or a change in beef.” Those “trimmed-mean averages” are alternative inflation gauges released by regional Fed banks that can give investors and policymakers a better sense of inflation’s breadth and direction. Warsh presides over his first policy meeting as chair next week. Investors now see the Fed potentially raising interest rates this year because of an Iran-war-fueled pickup in inflation. But if Warsh persuades his fellow policymakers to weigh different inflation measures instead, the bank could keep rates where they are — or even lower them — risking a bigger jump in price increases. The Federal Reserve Bank of Dallas produces one trimmed-mean gauge that shows annual inflation of 2.