Cook Warns of Inflation Risks, Prepares to Support Higher Interest Rates

Federal Reserve Governor Lisa D. Cook emphasized that inflation remains too high in the US economy and expressed her readiness to support higher interest rates if needed to reach the central bank's 2 percent target.

Cook highlighted the resilience of the US growth, noting that it has been growing at a solid pace despite persistent consumer unease. The personal consumption expenditures price index rose 3.7 percent in the 12 months through June, nearly double the target. Core prices climbed 3.3 percent over the same period.

Cook pointed to two unexpected sources of pressure this year: the conflict in the Middle East and companies' heavy spending on artificial intelligence infrastructure. These forces have shifted the balance of risks toward inflation and away from the labor market, she said.

The job market remains stable, with the national unemployment rate at 4.2 percent in June and initial claims for unemployment benefits running at historically low levels. However, consumer sentiment has lagged what a stable labor market would normally suggest due to uncertainty about how AI will reshape jobs and long-running structural pressures.