The Federal Reserve’s new leadership is quietly rewriting the rulebook on how it measures inflation, and the implications for interest rates, crypto, and every other risk asset on the planet are significant.
The numbers tell two very different stories
Fed Chair Kevin Warsh, confirmed to the role in April 2026, has signaled a preference for the Dallas Fed’s trimmed-mean Personal Consumption Expenditures index over the traditional core PCE metric that the central bank has relied on for years.
Why does that matter? Because in May 2026, those two measures painted radically different pictures of the economy. Headline PCE inflation came in at 4.1% year-over-year. Core PCE, which strips out food and energy, registered 3.4%. But the trimmed-mean PCE that Warsh favors? Just 2.4%.
The trimmed-mean approach works by cutting out the most extreme price movements on both ends of the distribution, not just food and energy. What remains, in theory, is a cleaner signal of where underlying inflation actually sits.
