Federal Reserve Governor Lisa Cook has expressed her willingness to raise interest rates if inflation continues to rise, despite currently supporting a steady rate policy. Speaking at Stanford’s Institute for Economic Policy Research, Cook highlighted the challenges posed by tariffs, the ongoing Iran conflict, and increased investment in artificial intelligence, all contributing to upward pressure on prices.

Inflation Concerns

Cook noted that inflation is moving in the wrong direction, driven by last year’s tariffs and the surge in oil prices since the Iran war began on February 28. Additionally, the demand for AI-related technology and rising wages for construction workers are contributing to inflationary pressures. Although she anticipates inflation will ease in the coming months, Cook remains vigilant about the potential for inflation to become entrenched in price and wage-setting behaviors.

Cook’s stance presents a potential challenge for new Federal Reserve Chair Kevin Warsh, who was appointed by President Donald Trump with the expectation of lowering interest rates once the Iran conflict concludes and energy prices stabilize. Other Fed policymakers have also indicated that a rate hike might be necessary.

Economic Growth and Job Market

Despite concerns about inflation, Cook remains optimistic about the economic growth potential from the rapid adoption of artificial intelligence. However, she acknowledges that this technological shift could initially lead to job losses before resulting in job gains, posing a risk to the otherwise stable job market. The unemployment rate in April stood at 4.3%.

Cook emphasized her readiness to adjust interest rates in response to economic conditions, stating she would lower rates if the job market deteriorates. Her balanced approach reflects the Federal Reserve’s dual mandate of promoting maximum employment and stable prices.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.