A Federal Reserve governor warns inflation risks outweigh employment concerns, keeping a rate hike on the table.
Federal Reserve Governor Lisa Cook stated she is prepared to support an interest rate hike if inflation does not show sustained improvement. Cook emphasized that inflation remains too high, with risks to price stability outweighing those to employment in the Fed’s dual mandate.
Recent June data indicated easing inflation, driven by lower energy prices, but Cook cautioned against overinterpreting a single report. Inflation continues to exceed the Fed’s 2% target, raising concerns about entrenched price and wage pressures. Last week, Cook voted with the 9-3 majority to hold rates steady at 3.5%-3.75%.
Cook warned that prolonged above-target inflation could lead to persistent price-setting behaviors, making future policy adjustments more difficult. She stressed the need for continued disinflation to avoid further action.