THINK Ahead

Latest edition · September 4, 2026

ING Think think ahead why kevin warsh is wrong about inflation

ING argues that Fed Chair Kevin Warsh's hawkish stance at Jackson Hole is flawed because his headline distribution chart ignores category weights and reflects fading tariff shocks. While a precautionary Fed hike in September remains likely, underlying inflation metrics suggest tightening will be limited.

Following Fed Chair Kevin Warsh's hawkish Jackson Hole speech, ING disputes the premise that underlying US inflation is worsening. Warsh's primary argument relies on an unweighted distribution where over 50% of PCE categories exceed 3% inflation; however, this is predominantly driven by low-weighted goods subjected to tariffs that are now being unwound following a Supreme Court ruling. Meanwhile, trimmed mean PCE is nearing the 2% target, annualized 3- and 6-month core PCE trends are cooling, and imputed financial services prices exaggerate core PCE. Although ING expects the Fed to deliver a precautionary rate hike in September backed by strong payrolls, it will likely prove to be a 'one-and-done' move alongside an expected ECB rate increase.

Key takeaways from the latest edition

• 1.Fed Chair Kevin Warsh's hawkish case based on unweighted PCE price category distributions is flawed because goods price shifts were driven by tariffs that are now reversing via Supreme Court-mandated refunds.
• 2.Underlying inflation trends are improving when measured via trimmed mean PCE (approaching 2%), market-based core PCE, and 3-to-6-month annualized rates.
• 3.Despite weak underlying justification, the Fed is more likely than not to execute a precautionary 'risk management' rate hike in September, which may ultimately prove to be 'one-and-done.'

What this series covers

• Why Kevin Warsh is wrong about inflation
• More than 50% of price categories have inflation rates above 3%
• Tariffs explain a lot of Warsh's scary chart
• Trimmed mean inflation looks much, much better
• The underlying trend of inflation is improving
• Core PCE inflation has been stronger in the first half of the year than the second
• THINK Ahead in developed markets
• Key events in developed markets

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