Federal Reserve Governor Lisa Cook on Wednesday said she feels the U.S. central bank should hold short-term interest rates steady for now but, with tariffs, the Iran war and a surge in AI-related investment pushing prices higher, she is prepared to hike rates if needed.
"I see elevated risks to both sides of our mandate, and from a risk-management perspective, I currently believe that the right course of action is to hold rates steady," Cook said in remarks prepared for delivery at a policy forum on AI at Stanford's Institute for Economic Policy Research.
But inflation, she said, is "clearly moving in the wrong direction," driven higher by last year's tariffs - an effect that should abate soon, she said - but also by oil prices that have surged since the February 28 start of the Iran war, and by a jump in demand for chips and software and upward pressure on construction worker wages as investment in AI data centers charges ahead.
And while she expects inflation to ease in coming months without having to raise rates, she worries that after five years of inflation running above the Fed's 2% target, it could work its way more persistently into price- and wage-setting behavior.
Source : reuters