Federal Reserve Board member Lisa Cook said that inflation expectations are currently stable, but this depends on maintaining appropriate monetary policy. Cook stated that the Fed should not become complacent and that a cautious approach to inflation must continue.
Cook stated that since last summer, the balance of risks has shifted significantly towards higher inflation, while the downside risks to the labor market have decreased. According to Cook, the US labor market generally maintains a stable appearance.
Cook stated that it would be reasonable to expect inflation to slow down for some time, but added that the Fed is ready to take necessary steps if price increases do not decline quickly enough.
Cook noted that there are some reasons to believe inflation could continue to cool in the coming period, but that tariffs, conflicts in the Middle East, and investments in artificial intelligence could lead to persistent price pressures. Cook said that the inflation risks stemming from these factors have not yet disappeared.
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Federal Reserve Chairman Kevin Warsh also frequently expressed his concerns about the inflation outlook in his testimony before the Senate. He stated that the recently released inflation data may not fully reflect underlying price pressures, and while the labor market appears quite strong, the inflation outlook is not equally positive.
Warsh stated, “I am not satisfied with any inflation indicator,” adding that the Fed will evaluate the tools at its disposal to combat inflation, including balance sheet policy and interest rates.
The Fed chairman stated that they will examine whether changes to existing policy tools are needed to ensure price stability.
*This is not investment advice.
