Fed Governor Cook issued a hawkish signal: Inflation risks have exceeded the labor market and he is ready to take action if necessary
Federal Reserve Governor Lisa Cook said on Wednesday that the main risk facing the U.S. economy has shifted from the job market to inflation, and continued high price pressure is becoming the focus of the Federal Reserve. She emphasized that if clear signs of cooling in inflation cannot be seen in the future, the Fed is ready to take action to ensure that inflation returns to the 2% target. Cook said at an event in Washington that day: "If we don't see signs that inflation will continue to fall in the near future, I am ready to take action. I will be unswervingly committed to achieving the Fed's inflation goals." It is worth noting that her remarks came as the latest U.S. consumer price index in June dropped for the first time in six years. However, Cook pointed out that based on other economic data released this week, the current inflation level is still nearly two percentage points higher than the 2% target as measured by the Fed's preferred inflation indicator. Last month, the Federal Reserve kept the target range for the federal funds rate unchanged at 3.50% to 3.75% for the fourth consecutive time. But the latest economic forecasts show that about half of Federal Open Market Committee officials expect at least one more interest rate hike this year. As inflation has been above target for five consecutive years, more and more Fed officials have begun to express concerns about the stickiness of inflation. Earlier in the day, Federal Reserve Chairman Warsh once again emphasized at a congressional hearing that he would resolutely restore price stability, while downplaying the view that investment in artificial intelligence will push up inflation in the long term. However, Cook is relatively cautious about this. She said that compared with a year ago, the current job market has stabilized, while inflation risks have increased significantly, and the focus of the Fed's policy has also changed. "In fact, I think the risks to the labor market are already lower than they were a year ago. So the risks to employment have subsided and the balance of policy risks has tilted more towards the inflation target." Cook believes that continued growth in investment in artificial intelligence infrastructure, as well as supply chain shocks caused by tariff policies and the situation in the Middle East, may become important factors in driving inflation to remain high for a long time. She pointed out that earlier this year, the situation in the Middle East had pushed up energy prices, but the recent continued rise in commodity prices shows that this round of rising inflation is not just caused by rising energy prices. Nonetheless, Cook said that medium- and long-term inflation expectations remain generally stable, indicating that the public still has confidence in the Federal Reserve to control inflation. But she also warned not to take it lightly. "Public confidence in the Fed is encouraging, but that doesn't mean we can let down our guard. Sustained high inflation in the past carries the risk of further pushing up future inflation." In the subsequent question and answer session, Cook said that the current Fed's monetary policy is still somewhat restrictive on the economy, but policymakers still have sufficient time to observe subsequent economic data before deciding whether to adjust policies. She emphasized that the inflation data released this week only reflect one month's situation and cannot be used to judge trends. "One month's data does not constitute a trend, so we must continue to closely monitor subsequent data changes." Open a futures account on Sina's cooperative platform, safe, fast and guaranteed