Cook said inflation remains too high despite softer June data, and warned the Federal Reserve may need to raise rates unless disinflation becomes clearer in coming months.
Federal Reserve Governor Lisa Cook said she is ready to support another interest rate increase if inflation does not continue to cool, underscoring concern inside the U.S. central bank that price pressures could become embedded after years above target. Speaking in Anchorage, Alaska, Cook said inflation is still too high and that she currently sees greater risk on the inflation side of the Fed's dual mandate than on the employment side. She noted that June data showed some easing, helped largely by a sharp drop in energy prices, but cautioned against drawing broad conclusions from a single report while inflation remains well above the Fed's 2% goal. Cook voted with the 9-3 majority last week to keep the benchmark rate unchanged at 3.5%-3.75%, saying she wanted more time to assess how fading tariff effects, an energy supply shock tied to the Iran war and price pressures linked to the artificial intelligence buildout affect inflation. She said she is prepared to act if continued disinflation does not appear soon. Markets see the Fed potentially moving as early as September, though pricing points to higher odds of action in October, according to CME Group's FedWatch. Earlier Wednesday, Minneapolis Fed President Neel Kashkari, one of the three dissenters, also said higher rates are still needed.