Federal Reserve Governor Lisa Cook said on Wednesday she is "prepared to act" if inflation does not begin to slow in the near term, while also indicating she is willing to wait "a bit more time" to see how price dynamics evolve.
Delivering remarks prepared for the Exchequer Club of Washington, D.C., Cook described it as "prudent to give a bit more time to observe how inflation unfolds from here." At the same time, she warned that "the risks continue to be strongly weighted toward higher inflation," attributing that tilt to an investment boom tied to artificial intelligence and to price pressures from tariffs and the U.S. war with Iran.
"If we do not see signs of disinflation soon, I am prepared to act," Cook said. "I am fully committed to reaching our inflation target, and this commitment is unwavering."
Cook drew a direct comparison between current conditions and those of roughly a year ago, noting a change in the balance of risks. With inflation running well above the Fed's 2% goal and the labor market appearing stable, she said the outlook has shifted from a period when employment risks and slowing inflation were more prominent.
"I see a notable shift in the balance of risks relative to a year or so ago, with inflation risks now outweighing employment risks," she said.
Her remarks come amid active debate among Fed officials about the prospect of another rate increase, a move market participants have been pricing in as possibly coming as soon as this fall. Fed Governor Christopher Waller also said this week that the central bank may need to act unless there is consistent evidence of slower inflation in the coming months.
The outlook for interest rates grew less certain this week after the U.S. government released two generally benign inflation reports. Those publications have complicated the near-term policy picture even as some Fed officials voice growing concern about upside inflationary pressures.
Adding to the calendar of monetary policy decisions, the Federal Reserve will hold its next policy meeting on July 28-29.
Cook's comments emphasize the central bank's continued focus on returning inflation to target. While she is affording policymakers "a bit more time" to evaluate incoming data, she left open the prospect of prompt action if disinflation does not become apparent.