Story perspectives

Warsh Testifies CPI 3.5%, Pushes Trimmed Inflation Metric

7/26/2026

Summary

Warsh Pushes Trim

Fed Chair Kevin Warsh testified before Congress that the Federal Reserve tolerates no persistently high inflation.
June consumer price index rose 3.5% year-over-year, down from May’s 4.2% but still above the 2% target.
Warsh omitted the Summary of Economic Projections at the June FOMC meeting, signaling reduced transparency.
He launched task forces to review inflation measurement and supports a “trimmed averages” method that would show inflation near 2%.

Summary

Austrians Question Fed

Austrian School critics argue the Federal Reserve’s (Fed) sway over interest rates and the dollar is greatly exaggerated.
They cite the 1933 Roosevelt and 1971 Nixon devaluations, saying Fed Chair Meyer and Fed Chair Burns offered only token resistance.
They warn Warsh’s market-favoring stance could further erode the Fed’s credibility, noting the bank never directly sets the dollar’s value.

History

Historical Context

In August 1971, President Richard Nixon announced the “Nixon Shock,” ending dollar-gold convertibility at $35 per ounce, effectively devaluing the currency. Federal Reserve Chairman Arthur Burns, Treasury Secretary John Connally, and the International Monetary Fund coordinated a 10 % dollar devaluation to curb inflation and trade deficits. Today's Fed Chair Kevin Warsh similarly pushes “trimmed-average” inflation metrics, echoing 1971’s attempt to reshape monetary credibility amid political pressure. The 1971 shock sparked prolonged dollar volatility, prompting later reforms that still influence contemporary debates over Fed transparency and inflation targeting.

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Warsh Pushes Trim

Fed Chair Kevin Warsh testified before Congress that the Federal Reserve tolerates no persistently high inflation.
June consumer price index rose 3.5% year-over-year, down from May’s 4.2% but still above the 2% target.
Warsh omitted the Summary of Economic Projections at the June FOMC meeting, signaling reduced transparency.
He launched task forces to review inflation measurement and supports a “trimmed averages” method that would show inflation near 2%.

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