Federal Reserve Governor Lisa Cook delivered a speech on Tuesday expressing concerns about inflation and the potential impact of President Donald Trump’s trade policies on the labor market. Cook highlighted the progress that has been made in terms of inflation, with core inflation at 2.5% and headline inflation at 2.1% in April. However, she warned that recent lower readings could reverse as tariffs continue to affect the economy.
Cook noted that the tariffs imposed by the Trump administration could lead to higher prices, making it difficult to achieve further progress in the near term. She emphasized that the recent experience with high inflation post-pandemic could make firms more willing to raise prices and consumers more likely to expect persistent high inflation.
The governor’s comments come just ahead of the Fed’s next policy meeting in June, where market expectations suggest that the central bank will maintain interest rates. Cook did not specify when she believes the Fed should ease again, but she emphasized the importance of remaining vigilant in responding to threats to the Fed’s mandate of full employment and low inflation.
In a separate speech, Atlanta Fed President Raphael Bostic indicated that he expects only one rate cut this year, citing concerns about inflation. However, Governor Christopher Waller expressed a more optimistic view, suggesting that tariffs could have a lesser impact than expected, potentially allowing for rate cuts by the end of 2025.
Overall, Cook’s remarks underscore the ongoing challenges facing the U.S. economy, with uncertainties surrounding trade policies and inflation. The Fed remains vigilant in its efforts to maintain price stability and promote full employment, while also acknowledging the need to adapt to evolving economic conditions.
