Fed Governor Lisa Cook said Wednesday that persistent inflation could force the central bank into a rate increase, even after last week's split vote to hold steady. She argued price risks now outweigh threats to the job market, joining several colleagues in flagging openness to tightening.
Federal Reserve Governor Lisa Cook told an audience in Anchorage, Alaska, on Wednesday that she's ready to back a rate increase if inflation doesn't resume cooling. According to CNBC: "As such, I am prepared to act by raising rates, if necessary." Cook was part of the 9-3 majority that voted last week to hold the Fed's benchmark rate in a range of 3.5% to 3.75%, saying she wanted to see how possibly waning effects from tariffs, an energy shock tied to the Iran war, and pressures from the AI buildout affect inflation.
Fed's rate-setters split further
Three officials dissented in favor of an immediate rate hike, and Minneapolis Fed President Neel Kashkari, one of them, said the same day that he still believes higher rates are necessary. Meanwhile, New York Fed President John Williams and Philadelphia Fed President Anna Paulson have also signaled openness to raising rates, widening the divide among policymakers. Fed Chairman Kevin Warsh, however, has offered little public guidance on the likely path for rates.
Room to wait is narrowing
Cook warned the Fed has little room left to wait, citing five years of inflation running above its 2% target, and said persistent overshoot risks becoming locked into wage- and price-setting behavior. Still, she pointed to tariffs, the Middle East conflict, and AI investment as forces that could still ease price pressures without further tightening. Cook also said the sour mood among U.S. consumers ties to a number of factors, including inflation, underscoring the stakes as the Fed weighs its next move.
Markets currently price the Fed's next move as soon as September, though CME Group's FedWatch shows higher odds for an October hike. The next FOMC meeting is set for mid-September.
Sources: CNBC, Investinglive, Investing.com
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