Federal Reserve (Fed) Governor Lisa Cook said on the 5th (local time) that she is prepared to raise interest rates if inflation does not ease easily.
According to Bloomberg News, Cook said in a public speech in Anchorage, Alaska, that "with inflation running above target over the past five years, the risk is growing that elevated inflation becomes entrenched in price and wage setting," adding, "if that happens, inflation will persist and it will be much harder to bring it down."
She went on, "If we do not soon see signs that disinflation is continuing, we are prepared to act," emphasizing, "returning inflation to target is the most important and primary task for achieving the dual mandate that Congress has given the Fed."
Cook's remarks are seen as suggesting the possibility of backing a rate hike at a future Federal Open Market Committee (FOMC) meeting if a slowdown in prices is not confirmed. On the 29th, she supported the majority view at the FOMC to hold the benchmark rate at 3.50% to 3.75%.
However, Cook noted that it is necessary to watch further how factors such as the potential gradual weakening of the tariff effect, energy supply shocks from the Iran war, and expense pressures from expanding artificial intelligence (AI) infrastructure will affect prices. If inflationary pressures from these factors ease, it could help lower inflation going forward.
Within the Fed, voices calling for rate hikes have been growing lately. Neel Kashkari, president of the Minneapolis Fed and one of the Fed's "three rate-hike advocates," also said that "now is an appropriate time to raise rates slowly," again arguing for the need to hike.
In an interview with CNBC, he said, "Corporate earnings are solid, and consumption and the labor market are in good shape," adding, "given these conditions, you ask yourself what the evidence is that current monetary policy is particularly restrictive."