Fed Governor Cook Signals Readiness to Raise Rates

Federal Reserve Governor Lisa Cook signaled on Wednesday, July 15, that she is prepared to raise interest rates if inflation does not show clear signs of slowing, marking a notable shift in her assessment of economic risks. Speaking at an Exchequer Club event in Washington, Cook stated that the balance of risks has tilted decisively toward persistent inflation, outweighing concerns about the labor market, a reversal from the outlook a year ago.

Cook emphasized she is willing to be patient for now, describing it as prudent to give more time to observe incoming data. However, she warned that the risks are strongly weighted toward higher inflation due to several new pressures. She specifically cited the massive investment boom in artificial intelligence infrastructure, new tariffs, and ongoing conflict in the Middle East involving Iran, which has driven up energy costs. These factors, she argued, complicate the Federal Reserve's path back to its 2% inflation target, a goal it has not achieved in over five years.

"The initial assessment is easy: inflation is simply too high," Cook said. She added, "I see a notable shift in the balance of risks relative to a year or so ago, with...