Fed Governor Lisa Cook: "Prepared to act on interest rate hikes if necessary"

Fed Governor Lisa Cook: "Prepared to act on interest rate hikes if necessary"

Hints at a shift from rate freeze to hikes..."Inflation risk greater than employment"

Minneapolis Fed President, one of the 'three hawks for rate hikes,' also says, "Now is the right time to raise rates slowly"

Lisa Cook, a governor of the U.S. Federal Reserve (Fed), stated on the 5th (local time) that she is "prepared to act on interest rate hikes if necessary," pointing to the risk of persistently high inflation in the U.S.

During a public speech in Anchorage, Alaska, Governor Cook said, "Inflation is excessively high, and at this point, I see the risk on the price stability side as greater among our dual mandate (of price stability and maximum employment)."

She emphasized, "I will consider what negative impacts interest rate hikes could have on the stability of the labor market and growth rates," but added, "Nevertheless, I will support interest rate hikes if necessary to bring down inflation."

Governor Cook voted with the majority to keep the benchmark interest rate at 3.5-3.75% during the Fed's rate-setting meeting on the 29th of last month.

Her remarks are interpreted as an indication that she could join the rate hike camp in future Federal Open Market Committee (FOMC) meetings if inflation does not improve.

Governor Cook stated that it is necessary to further observe how the diminishing impact of tariffs, energy supply shocks due to the Iran war, and pressures from expanding artificial intelligence (AI) infrastructure might affect prices. She predicted that if price pressures from these areas ease, they could become factors that reduce future inflation.

Neal Kashkari, President of the Federal Reserve Bank of Minneapolis and one of the 'three hawks for rate hikes' within the Fed, reiterated his argument for rate hikes today, saying, "Now is an appropriate time to raise rates slowly."

In an interview with CNBC, he mentioned that companies are performing well, and consumption and the labor market are also in good shape, adding, "When I see these conditions, I ask myself what evidence there is that current monetary policy is particularly restrictive."

During last week's FOMC meeting, President Kashkari, along with Beth Hammack, President of the Cleveland Fed, and Lorie Logan, President of the Dallas Fed, argued for the need for rate hikes and opposed the decision to keep rates unchanged.