US Federal Reserve Governor Lisa Cook said she is prepared to support an interest rate hike unless inflation numbers improve. Speaking in Anchorage, Alaska, Cook noted that the pace of price increases is running well ahead of the Federal Reserve's 2% inflation goal.
Cook stated that inflation is currently too high, noting that she considers the risks to the inflation side of the dual mandate higher than the risks to the employment side at this point.
As such, I am prepared to act by raising rates, if necessary.
The Governor warned that with five years of above-target inflation, there is a growing risk that higher inflation may become entrenched in price- and wage-setting behavior. Regarding the ability to wait longer before acting, Cook said, 'We do not have that luxury in this one.'
Recent rate decisions and market outlook
Last week, Cook was part of a 9-3 majority vote to keep the Federal Reserve's benchmark borrowing rate in a range between 3.5%-3.75%.
Minneapolis Fed President Neel Kashkari, who was one of the three dissenting votes in that decision, told CNBC that he still believes higher rates are necessary.
The current range of the US Federal Reserve's benchmark borrowing rate.
While June data showed inflation easing, largely due to a sharp slide in energy prices, Cook stated that if she does not see signs of continued disinflation soon, she is prepared to act.
According to the CME Group's FedWatch, markets expect the Federal Reserve could act as soon as September, though they are pricing in higher odds for a move in October.
