BY MIRABEL ODETA
Federal Reserve Governor Lisa Cook on Wednesday indicated that she is unlikely to suport additional interest-rate cuts until there is clearer evidence that inflationary pressures are easing. Speaking at the Economic Club of Miami, Cook emphasized that her primary concern remains the lack of progress in controlling rising prices, rather than any signs of a weakening labor market. Her remarks come a week after she joined the majority of her fellow U.S. central bankers in a 10-2 vote to maintain the current policy rate, following three consecutive reductions in previous meetings.
“At this time, I see the risks as tilted toward higher inflation,” Cook said, stressing the importance of a cautious approach. She noted that the Fed had already implemented substantial monetary easing at the end of last year, and given the current state of the labor market and persistent inflation, it is prudent to pause and observe the effects before making further adjustments. Cook described current monetary policy as “ever so mildly restrictive,” reflecting a careful balance between stimulating economic growth and containing inflation.
The Federal Reserve’s target for short-term borrowing rates is presently set at 3.50% to 3.75%. Following last week’s decision to hold rates steady, Fed Chair Jerome Powell affirmed that the central bank remains well-positioned to evaluate the need for any future rate cuts. Despite this, financial markets are anticipating two additional reductions, projected to occur after Powell’s term concludes in May.
President Donald Trump has repeatedly urged the Fed to implement rate cuts more rapidly and extensively. Last week, he nominated former Fed governor Kevin Warsh to succeed Powell, citing Warsh’s support for the kind of rate cuts the president favors. Trump’s prior attempt to remove Cook from her position, based on alleged inaccuracies in her mortgage applications, is now before the Supreme Court. Cook has filed suit to block the effort. Addressing the matter, she refrained from commenting on the ongoing case, instead highlighting the support she has received from colleagues and friends across the financial and academic communities. “It is an honor to serve on the Board of Governors of the Federal Reserve System,” she said. “I will continue to carry out my sworn duties in that role on behalf of the American people.”
Since joining the Fed in 2022, Cook has consistently voted alongside Powell and the majority of her fellow policymakers, supporting rate increases to combat rising inflation and more recently endorsing cuts when the labor market showed signs of strain. She described the current job market as stable, echoing Powell’s assessment. Unemployment, at 4.4% in December, remains well below the 50-year pre-pandemic average of 6.2%, reflecting a resilient labor market.
Despite the strong job market, Cook signaled a more hawkish stance than Powell regarding inflation. She noted that progress toward the Fed’s 2% inflation target has stalled, with estimates indicating inflation around 3% after excluding volatile food and energy prices. “Such a plateau is frustrating after seeing significant disinflation in the preceding few years,” she said, stressing the need for the Fed to maintain credibility by guiding inflation back to target in a timely manner.
Cook acknowledged that inflation may ease this year as the impact of tariffs on goods diminishes, but she warned of considerable uncertainty, including potential changes to trade policy and the risk that inflation expectations could become entrenched. “After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future,” she said. She concluded by emphasizing that, absent unexpected changes in the labor market, her primary focus will remain on ensuring that inflation moves sustainably back toward the Fed’s 2% goal before consideringe additional rate cuts.
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