Cook Issues Strong Warning on Inflation
Federal Reserve Governor Lisa Cook said she supported the decision to keep interest rates unchanged at the latest FOMC meeting. She preferred to wait for more economic data before determining whether US monetary policy needs to be tightened further. The benchmark interest rate currently stands in the 3.50%–3.75% range.
However, Cook believes inflation risks currently outweigh the risks of a weakening labor market. In a speech in Anchorage, Alaska, she emphasized that she would be prepared to support a rate increase if further progress on disinflation does not emerge soon.
Cook also highlighted that inflation has remained above the Fed’s target for about five years. This creates a risk that elevated prices could become embedded in wage decisions and corporate pricing behavior, making inflation increasingly difficult to control if the central bank waits too long to act.
Price pressures are still being driven by trade tariffs, the conflict in the Middle East, and a surge in artificial intelligence infrastructure investment. Although these factors could eventually ease, Cook reaffirmed her commitment to bringing inflation back toward the Fed’s 2% target.
Newsmaker Analysis: Cook’s remarks were hawkish and could support the US dollar and Treasury yields while putting pressure on gold and equities. However, their impact may be limited by weak ADP employment data and the contraction in the ISM services employment component. Market attention now turns to the NFP report. Strong data would increase the probability of another rate hike, while a weaker result could pressure the dollar and provide further support for gold. (arl)
Source: Newsmaker.id
