Fed’s Cook: Policy still positioned to lower inflation pressures

Federal Reserve (Fed) Governor Lisa Cook spoke about the economic outlook and monetary policy at the Brookings Institution in Washington, DC, on Monday. During her speech, she discussed the recent Fed interest rate cut, stating that it was appropriate given the risks to the job market and that the government shutdown is weighing on the economy, but growth should return.

Key takeaways

Every US central bank meeting is 'live' for monetary policy, which is not on preset path.

Recent Fed interest rate cut was appropriate given job market risks.

Risks to both sides of central bank's mandate are elevated.

Current policy appropriately modestly restrictive.

Policy still positioned to lower inflation pressures.

Supported Fed's move to stop shrinking its balance sheet.

Government shutdown weighing on economy, but growth should return.

Artificial intelligence productivity gains will help power further expansion.

Labor market 'still solid,' monitoring it for signs of trouble.

Inflation elevated and subject to upside risks.

Tariffs still driving up price pressures.

Slowing payroll growth tied to labor supply changes.

Inflation should move to 2% target once tariff impacts pass through.

Tariff pass-through is still playing out.

Underlying inflation moving to 2%, expectations are contained.

Remains fully committed to getting inflation back to 2%."

The announced layoffs may not materialize; we need to see the data.

The Fed's mandates are in tension right now, attentive to risks on both sides.

I am worried about the labor market because of the fact that it can deteriorate very quickly.

I would be ready to act if inflation proves more persistent.

Also attentive to inflation expectations through NY Fed and other surveys.

Watching tariff effects closely to understand how businesses and families react.

It is important to be timely and use the most current incoming data for the December rate decision.

There is tension between asset valuations being high and low risk premia, but I still see policy as being restrictive.

I want to make sure that the regulatory mandate is carried out to the fullest extent.

There's reason to be concerned about the unemployment uptick.

Hiring is slowing according to numerous real-time sources; do not need the employment report for that.

I hope the trajectory of federal debt changes in the near future.