Aditya Bhave

Bank of America Economist Warns Warsh's Inflation Measure Could Backfire

Bank of America economist Aditya Bhave warned that Kevin Warsh's proposed trimmed-mean inflation measure — which removes extreme price shocks — might not achieve its intended effect. While Warsh's method shows softer inflation (2.3-2.8% vs 3% core PCE), Bhave noted it could paradoxically give more weight to food and energy prices. Historical data shows trimmed-median exceeded core PCE in 2019-2020, which would have encouraged a hawkish Fed stance.