New Delhi, April 22 -- Kevin Warsh, President Donald Trump's nominee for Fed chair, faced pointed questions Tuesday at his Senate Banking Committee confirmation hearing, with lawmakers zeroing in on his lack of investment disclosures, his stance on Fed independence and, of course, inflation.

While the public watches the consumer price index (CPI) to follow inflation, the Federal Reserve spends its time tracking a different set of initials: PCE.

The personal consumption expenditures price index, a monthly measure of the prices Americans pay for goods and services, is the Fed's preferred gauge of inflation and a key input in its interest-rate decisions.

Damjan Pfajfar, vice president in the research department at the Federal Reserve Bank...