Economist: Powell's Favorite Unconventional Inflation Gauge "Unreliable," Hopes for Challenge

2026.06.16 17:00:19

June 16: Federal Reserve Chair Jerome Powell signaled a preference for the "trimmed mean PCE inflation" metric—an inflation gauge that excludes extreme price values before calculating a weighted average. Boston College economics professor Brian Bethune notes the trimmed mean PCE isn’t the most reliable indicator right now. He explains this measure works best when inflation shocks mirror the 2009–2019 pre-COVID period, where positive and negative price shocks were relatively balanced. But when price shocks stem from factors like supply disruptions, tariffs, surging oil costs, or major special events (such as the World Cup), the trimmed mean PCE tends to understate actual inflation. Bethune added that he hopes someone will challenge this take. Regardless of which inflation metric is used, U.S. inflation has remained above the Fed’s 2% target since spring 2021. (FX168)

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