Federal Reserve governor Lisa Cook said she is prepared to act if the Fed does not see signs of disinflation soon. She backed last month's decision to hold rates steady but flagged tariffs, the Middle East conflict, and the AI buildout as reasons to stay cautious.
Federal Reserve governor Lisa Cook told an audience in Washington, D.C. that she is prepared to act if the Fed does not see any signs of disinflation soon. Her warning came days after softer-than-expected inflation reports this week.
Cook said she supported the committee's decision to hold rates steady at last month's meeting, reasoning that tariffs and the Middle East conflict should push inflation up only briefly. That patience, she signaled, has limits.
Cooler data still runs hot
This week's consumer price and producer price reports came in softer than expected. But Cook said those measures still show readings above the Fed's 2% target. According to MarketScreener, Cook said in her prepared remarks: "If we do not see signs of disinflation soon, I am prepared to act."
She named two worries. First, the artificial intelligence buildout shows no sign of slowing. Second, she said the recent supply shock from tariffs and the Middle East conflict could lead to "persistently high inflation."
Five years above target
Textbook policy calls for looking through supply shocks. Yet Cook noted these arrive after the Fed's inflation target has sat over its preferred range for five years. That backdrop, she argued, leaves less room to wait.
Fed governor Christopher Waller struck a similar note earlier this week, arguing that anchored expectations let policymakers bring inflation down more deliberately. On Monday, Waller pushed back on a common view that anchored expectations excuse central bankers from responding to above-target inflation, calling that view wrong.
Source: MarketScreener
Trading involves risk.
Risk Disclaimer
