Speaking at the Economic Club of Miami, Cook said she sees risks as “tilted toward higher inflation,” a more hawkish tone than recent remarks by some of her colleagues
Federal Reserve Governor Lisa Cook on Thursday signalled that the US central bank is in no hurry to cut interest rates again, saying policymakers should “sit back and wait” for clearer evidence that inflation is moving sustainably lower, even as the labour market shows signs of stabilising.
Speaking at the Economic Club of Miami, Cook said she sees risks as “tilted toward higher inflation,” a more hawkish tone than recent remarks by some of her colleagues. Her comments come a week after she joined the majority in a 10-2 vote to keep the Fed’s benchmark rate unchanged at 3.50–3.75 per cent, following three consecutive rate cuts late last year.
“We put a lot of easing into the pipeline at the end of last year and I think that given where the labor market is, where inflation is, this is the right time to sit back and wait to see what happens,” Cook said. She described current monetary policy as “ever so mildly restrictive.”
Her remarks suggest caution within the Federal Open Market Committee (FOMC) despite financial markets pricing in two additional rate cuts later this year, both expected after Fed Chair Jerome Powell’s leadership term ends in May.
Inflation progress stalls
Cook’s primary concern remains inflation, which she said has plateaued after a period of meaningful disinflation. While the Fed targets 2 per cent inflation, recent estimates suggest core inflation was running at about 3 per cent at the end of last year.
“Such a plateau is frustrating after seeing significant disinflation in the preceding few years,” she said.
Although Cook expressed optimism that the impact of tariffs on goods prices could fade this year, she warned of “much uncertainty” surrounding the path ahead. That uncertainty includes potential changes in tariff policy and the risk that inflation expectations could become entrenched after nearly five years of above-target price growth.
“After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future,” she said. “Until I see stronger evidence that inflation is moving sustainably back down to target, that is where my focus will be, in the absence of unexpected changes in the labor market.”
Labour market stabilises
On employment, Cook said the labour market has “stabilised,” echoing Powell’s assessment last week. The unemployment rate stood at 4.4 percent in December, well below the 50-year pre-pandemic average of 6.2 percent, suggesting limited immediate pressure for aggressive monetary easing.
Cook has consistently voted with Powell and the majority of policymakers since joining the Board of Governors in 2022, backing rate hikes when inflation surged and more recently supporting rate cuts as labour market conditions softened.
Political pressure mounts
The policy debate is unfolding against a backdrop of renewed political pressure on the central bank. President Donald Trump has publicly urged the Fed to cut rates more quickly and recently nominated former Fed governor Kevin Warsh, seen as more supportive of lower rates, to succeed Powell.
Trump also sought last year to remove Cook from her position over alleged misstatements related to mortgage applications. Cook has challenged that move in court, with the case now before the US Supreme Court. The legal battle is widely seen as a test of presidential authority over the Federal Reserve’s independence.
Without directly addressing the litigation, Cook said she had received an “outpouring” of support and reaffirmed her commitment to her role. “It is an honor to serve on the Board of Governors of the Federal Reserve System,” she said. “I will continue to carry out my sworn duties in that role on behalf of the American people.”
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