Kevin Warsh signals cautious optimism as trimmed mean inflation data shows a downward trend toward the Federal Reserve's target.
The Federal Reserve is monitoring new data indicating that underlying inflation is trending back toward the central bank's target. Trimmed mean measures, which exclude price outliers, showed inflation at its lowest level since the early part of the decade. Specifically, the Dallas Fed's measure put the one-month annualized rate at 1.4% in June, while the 12-month rate dipped to 2.2%. Kevin Warsh expressed halting confidence in the current trajectory, noting that while the data is positive, the central bank still has significant work to do to address the five-plus years of inflation above target. The administration announced that the Commerce Department released the personal consumption expenditures price index, which showed a 0.1% monthly decline in all-items. Economists suggest that markets may begin to price out future rate hikes. However, Lorie Logan of the Dallas Fed cautioned that the trimmed mean might be lower than the true inflation trend due to compositional factors. She joined other regional presidents in dissenting from the decision to keep interest rates steady, arguing that inflation remains uncomfortably high.