Federal Reserve Governor Lisa Cook indicated that inflation is moving in the wrong direction and stated she is prepared to raise interest rates if this trend continues.
Cook expressed a preference for keeping borrowing costs steady for now, anticipating a renewed slowdown in price increases in the coming months. Her remarks align with several other Fed officials who have recently signaled greater concern over the current acceleration in inflation than over labor market conditions.
"I want to be clear about my risk assessment: the risks remain tilted toward higher inflation," Cook said Wednesday in prepared remarks for an event at Stanford University.
Cook noted that inflation has exceeded the Fed's 2% target for five consecutive years, a situation that could embed price pressures deeply into pricing and wage-setting behaviors. "Therefore, if the anticipated disinflation does not materialize in a timely manner, I am prepared to raise rates," she stated.
Ongoing conflicts involving the U.S. in the Middle East continue to disrupt energy markets, adding upward pressure to inflation. The Consumer Price Index (CPI) in April recorded its largest year-over-year increase since 2023, driven by rising costs for gasoline, rent, and food.
According to the minutes from the Fed's April meeting, most officials warned that the central bank may need to consider raising interest rates if inflation persists above the 2% target. At that meeting, policymakers decided to maintain the federal funds rate target range at 5.25% to 5.50%.
In her speech, Cook also highlighted that the $1.5 trillion investment boom in artificial intelligence could trigger another price shock, specifically affecting prices for chips and other high-tech equipment.
While she described the labor market as broadly stable, Cook assessed that the risks to employment are tilted to the downside.
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