Fed's Cook Warns Persistent Inflationary Pressures Ahead

Federal Reserve Governor Lisa Cook warned that inflationary pressures will persist due to rising oil prices and increasing demand for artificial intelligence, according to Reuters. Speaking at a conference in Oakland, California, Cook indicated that she anticipates continued pressure on inflation from AI buildout and the pass-through of higher oil prices.

Cook noted that total inflation was approximately 3.8% over the 12 months through August, about twice the 2% target. She also stated that while AI-driven productivity gains will produce some disinflation in the medium term, these gains are unlikely to offset inflationary pressures this year.

The Fed raised its policy rate for the first time in three years this month, aiming to return inflation to its 2% goal more promptly. Policymakers have projected one additional rate hike by the end of this year, with financial markets pricing in a roughly 75% probability of a Fed rate hike next month.