Fed Governor Cook says rates steady, warns of possible hike

Federal Reserve Governor Lisa Cook said on Wednesday that holding interest rates steady is the appropriate policy for now, but she warned she is prepared to raise them if inflation does not subside in a timely manner. Cook delivered the remarks at a policy forum on artificial intelligence hosted by Stanford University’s Institute for Economic Policy Research.

Cook stated that inflation is moving in the wrong direction, driven by three primary factors: tariffs imposed last year, elevated oil prices linked to the ongoing conflict with Iran, and a surge in investment related to artificial intelligence. She noted that while some of these pressures, like the tariff effects, should prove temporary, the persistence of inflation above the Fed's 2 percent target for five years raises the risk that price increases could become embedded in the economy.

"The risks remain tilted toward higher inflation," Cook said. "I am prepared to raise rates if the expected disinflation does not appear in a timely manner."

Cook voted with the majority at the Fed's most recent meeting to hold the benchmark policy rate steady in the range of 3.50% to 3.75%. Her comments align her with a growing number of Fed...