WASHINGTON — Federal Reserve Governor Lisa Cook declared Wednesday that she stands ready to take action if inflation fails to show signs of cooling in the near future, though she is willing to allow a little more time to see how things develop.
In remarks prepared for delivery to the Exchequer Club of Washington, D.C., Cook pointed to several factors fueling ongoing price pressures, including a surge in investment tied to artificial intelligence, tariff-driven cost increases, and the U.S. conflict with Iran.
“I see it as prudent to give a bit more time to observe how inflation unfolds from here. Going forward, though, I believe the risks continue to be strongly weighted toward higher inflation,” Cook said.
She made clear her commitment to bringing inflation under control would not waver. “If we do not see signs of disinflation soon, I am prepared to act,” Cook said. “I am fully committed to reaching our inflation target, and this commitment is unwavering.”
Cook drew a contrast between the current economic environment and where things stood roughly a year ago. At that time, concerns were split between a softening job market and slowing inflation. Now, she said, the balance has shifted.
“I see a notable shift in the balance of risks relative to a year or so ago, with inflation risks now outweighing employment risks,” Cook said. Inflation currently sits well above the Fed’s 2% target, while the labor market appears relatively stable.
Cook is not alone in her thinking. Fed Governor Christopher Waller also said this week that the central bank may need to step in unless there is consistent evidence of inflation slowing in the months ahead. Investors are already anticipating a possible rate hike as soon as this fall.
The picture became somewhat less clear this week after the federal government released two inflation reports that were largely viewed as benign.
Meanwhile, Fed Chairman Kevin Warsh has stayed quiet on his personal views regarding interest rates, even as a growing number of his colleagues appear to be leaning toward tighter monetary policy.
The Federal Reserve is set to hold its next policy meeting on July 28 and 29.
