Cook Warns of Persistent Inflationary Pressures from AI and Oil
Federal Reserve Governor Lisa Cook expects inflationary pressures to persist in the United States due to demand related to artificial intelligence (AI) and rising oil prices. However, she did not confirm that further interest rate increases would be necessary.
Cook said she would consider the level of the policy interest rate needed to guide inflation towards the Fed's 2% target. The number and size of the next interest rate adjustments will depend on how the economy responds to policies already implemented, as well as inflation and labour market data over the coming months.
The Fed raised its benchmark interest rate this month for the first time in three years, aiming to bring inflation back towards its 2% target. Cook joined the unanimous decision to raise rates. Fed policymakers project one further interest rate increase by the end of the year to address inflation, which has remained above the 2% target for more than five years.
Oil prices rose about 2% on Monday after US President Donald Trump rejected a deal with Iran concerning the reopening of the Strait of Hormuz. Financial markets are now pricing in about a 75% chance of a Fed rate increase at next month's meeting, as well as the possibility of a third consecutive increase at the December meeting.