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Kevin Warsh, nominee to chairman of the Federal Reserve, testifies during his Senate Banking, Housing and Urban Affairs Committee confirmation hearing on April 21, 2026. (Tom Williams\/CQ-Roll Call, Inc via Getty Images) \u00b7 Tom Williams via Getty Images \u2018The center is moving\u2019 <\/p>\n
The three regional bank presidents effectively sent a signal to Warsh, who has implied an easing bias, that they have concerns about inflation, which remains more than a full percentage point<\/a> above their goal, as a surge in oil prices hits on top of tariffs. The Personal Consumption Expenditures index (PCE) rose 3.5% for the month of March, up from 2.8% in February before the war. On a \u201ccore\u201d basis, which excludes volatile energy and food prices, inflation rose 3.2%, up from 3% in February.<\/p>\n Resistance could spread beyond the three dissenting members. While Powell noted in his press conference that \u201cnobody\u2019s calling for a hike right now,\u201d and the majority didn\u2019t want to change the easing bias language in the statement, he also said that \u201cthe center [of the Committee] is moving toward a more neutral place.\u201d<\/p>\n That is, most of the committee is moving away from a bias toward rate cuts \u2014 even if the statement didn\u2019t say it.<\/p>\n \u201c[It\u2019s] implying that the support for a more balanced expression of the risks to the dual mandate is broader than just the aforementioned three dissenting voting members,\u201d said Matt Luzzetti, chief US economist for Deutsche Bank.<\/p>\n Read more:\u00a0How jobs, inflation, and the Fed are all related<\/a><\/p>\n Changing the inflation framework <\/p>\n During his confirmation hearing last week, Warsh said the Fed\u2019s preferred inflation measure \u2014 core PCE \u2014 offers only a rough picture of inflation. He favors using \u201ctrimmed averages\u201d of inflation because they remove outliers.<\/p>\n He said the current underlying trend of inflation is \u201csomewhat improving\u201d and looks \u201cquite favorable\u201d when examining so-called trimmed averages.<\/p>\n Former Cleveland Fed president Loretta Mester warned that those measures should be used with caution because of their tendency to reflect a downward bias. The Cleveland Fed offers one of the trimmed mean inflation measures.<\/p>\n \u201cThis seems like a particularly poor time to be going toward trimming because of the downward bias,\u201d she said.<\/p>\n Warsh could face resistance to changing the Fed\u2019s inflation framework.<\/p>\n The inflation picture is becoming more difficult to understand, even aside from changing how it\u2019s measured. Price increases have been moving at a rate higher than the Fed\u2019s target of 2% for five years. At the same time, tariffs are pushing up goods prices. The surge in oil prices is the latest shock. But services inflation \u2014 which isn\u2019t impacted by tariffs \u2014 looked sticky since last year, before the rise in oil prices.<\/p>\n Prior to his nomination to the Fed, Warsh last year said he believed artificial intelligence would boost productivity so much that it could push down inflation and allow the Fed to cut rates.<\/p>\n While he touched on AI during his hearing, Warsh did not reaffirm those comments, only suggesting that AI and what he called an \u201cinnovation cycle\u201d could improve prices over time and make the Fed\u2019s job easier in terms of inflation. But he also noted that AI could affect employment and that the Fed needs to take that into account when setting rates.<\/p>\n \u201cIf the central bank has that good family fight, I think they\u2019re going to make better decisions,\u201d Warsh said. \u201cAnd if they happen to make mistakes, they\u2019ll correct them sooner.\u201d<\/p>\n Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms<\/a> and on Instagram<\/a>.<\/p>\n Click here for the latest economic news and indicators to help inform your investing decisions<\/a><\/p>\n Read the latest financial and business news from Yahoo Finance<\/a><\/p>\n Bacon is displayed for sale at a grocery store on April 29, 2026, in Chicago. (AP Photo\/Erin Hooley) \u00b7 ASSOCIATED PRESS <\/p>\n