Fed Governor Cook: "Ready to Raise Rates if Inflation Remains High"

"Inflation Risks Remain to the Upside"
Price Stability Now a Bigger Concern Than Labor Market
AI Investment Boom Could Fuel Further Price Shocks

Federal Reserve (Fed) Governor Lisa Cook has indicated the possibility of additional interest rate hikes if inflation does not slow as expected.

According to Bloomberg News on May 27 (local time), Governor Lisa Cook stated during a speech at a Stanford University event that "the risks to inflation remain skewed to the upside" and added, "If the expected disinflation does not materialize in a timely manner, we are prepared to raise rates."

Exterior view of the United States Federal Reserve building. Photo by Yonhap News

However, Governor Cook maintained that it is currently appropriate to keep interest rates on hold. She predicted that inflation would resume its downward trend in the coming months, but also noted that recent developments have been moving in a direction contrary to expectations.

Governor Cook's remarks align with recent shifts in sentiment within the Fed. Bloomberg assessed that concerns over a reacceleration of inflation are growing, making price stability a higher policy priority than a slowing labor market.

Indeed, minutes from the Federal Open Market Committee (FOMC) meeting in April showed that several Fed officials mentioned the possibility of "further tightening" if inflation consistently exceeds the target. At that time, the Fed kept the benchmark interest rate unchanged at 3.5 to 3.75 percent per year.

Governor Cook also expressed concern that the war with Iran is destabilizing energy markets and increasing inflationary pressures. As volatility in international oil prices has surged due to the aftermath of the conflict between the United States and Iran, the U.S. Consumer Price Index (CPI) for April posted its largest increase since 2023, driven by rising prices for gasoline, housing, and food.

Additionally, Governor Cook pointed out that the artificial intelligence (AI) investment boom, which is valued at around 1.5 trillion dollars, could become another factor driving up prices. She explained that soaring demand for semiconductors and advanced equipment may lead to higher prices.

Regarding the labor market, she assessed that it remains relatively stable. Governor Cook stated, "Downside risks to employment have increased, but overall, the labor market is stable."

This content was produced with the assistance of AI translation services.