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Fed Governor Cook warns patience on inflation has limits

Cook said she would not rely on a single data point, while arguing inflation risks are now outweighing labor-market risks.

Reported · Written up by our desk · Central Banks

Federal Reserve Governor Lisa Cook said policymakers cannot afford to be complacent after more than five years of inflation above target, warning that tolerance for delay is limited if price pressures do not ease. Speaking Wednesday, Cook reiterated that inflation is still too high even though there was some improvement reported for June.

Cook said she would not put too much weight on any single data point given uncertainty in the outlook. While she supported leaving interest rates unchanged at last week’s FOMC meeting, she added that she is prepared to act by raising rates if necessary.

She argued that inflation risks remain stronger than labor-market risks, pointing to elevated energy prices tied to the Middle East conflict and AI-driven investment as unexpected sources of upward pressure. Cook said these factors have shifted the balance of risks toward inflation, away from the labor market.

Cook also outlined why she backed holding rates for now, citing disinflation forces she sees emerging: fading tariff effects, the prospect of lower oil prices later this year, and easing AI-related goods inflation as supply chains adjust. She warned that if continued disinflation does not show up soon, she is prepared to act, saying the Fed does not have the luxury of waiting indefinitely because prolonged above-target inflation could become entrenched in wage and price setting.

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