Federal Reserve Governor Lisa Cook will speak at the Federal Reserve Listen Event held in Washington, DC on March 22, 2024.
Al Drago | Bloomberg | Getty Images
Federal Reserve Gov. Lisa Cook on Tuesday expressed concern over the progress of inflation, saying recent low readings could be reversed after tariffs worked through the economy.
Additionally, Cook said he expects President Donald Trump’s trade policy moves could hit the labour market, but she noted that the economy is in relatively good condition for now.
“I have not expressed my opinion on administration policies, but I am studying economic implications, which appears to raise the possibility of both higher inflation and cooling the labour market,” the policymaker said in a speech to the Council of Diplomatic Relations in New York.
Regarding inflation, a report last week using the Fed’s priority said that core inflation had progressed at 2.5% headlines in April at 2.1%.
However, economists primarily expect tariffs to increase costs. Fed officials generally view tariffs as a one-off event of prices, but the broad scope of Trump’s taxation could change the equation.
“The price rises associated with changes in trade policy may make it difficult to achieve further progress in the short term,” Cook said. “Recent experiences of high inflation may make businesses more likely to be willing to raise prices and consumers are more likely to expect high inflation to last.”
In fact, survey-based measures of inflation refer to a huge surge over the next year. However, market-based measures further show more calm expectations.
Cook’s comments will be made two weeks before the Fed’s next policy meeting, which took place June 17-18. Market expectations show overwhelmingly that central banks are once again pending interest rates. And most statements from policymakers since the last meeting will set it back. Traders are hoping that the next Fed cut will arrive in September.
Cook did not specify that the Fed believes they could ease again. The current policy says she and her colleagues are set in a place where they can respond to the threats on both sides of the Fed’s mission to full employment and low inflation.
“I think the US economy is still in a solid position, but the growing uncertainty poses risks to both price stability and unemployment,” she said. “I think it’s worth it when making decisions, I think it’s worth staying an economic history student. Our past has provided some useful lessons for decision making during periods of high uncertainty and increased risks about the goals of dual mandart.”
Earlier that day, Atlanta Federal President Rafael Bostic said that “most fees are expected to be ‘most’ this year.’ [inflation] The countermeasure is still red. ”
However, in a speech over the weekend, Gov. Christopher Waller said that he expected tariffs to be at the bottom of expectations and that even so, allowing the Fed to enact reductions in the “good news” rates by the end of 2025 would have an impact later in the year.
