Fed’s Cook Underscores Importance of Price Stability for Economy
Federal Reserve Governor Lisa Cook said she sees tariffs as potentially stoking inflation and weakening employment, yet underscored the importance of price stability when considering future interest-rate adjustments.
“As I consider the appropriate path of monetary policy, I will carefully consider how to balance our dual mandate, and I will take into account the fact that price stability is essential for achieving long periods of strong labor market conditions,” Cook said Tuesday in prepared remarks for an event organized by the Council on Foreign Relations in New York.
Fed officials remain in a wait-and-see mode, saying policy is well positioned to wait for more clarity on the economic impact of changes to immigration, trade and fiscal policy. The central bank is widely expected to hold interest rates steady at its next gathering on June 17-18.
Cook said there is evidence trade policy changes are starting to affect the economy, highlighting manufacturing data and a decline in firms’ plans for capital expenditures. Looking ahead, she said tariffs “appear to be increasing the likelihood of both higher inflation and labor-market cooling.”
She stressed the importance of inflation expectations, and said she is monitoring such measures “carefully.” She said she is “committed” to supporting monetary policy that keeps longer-term inflation expectations anchored.
“The recent post-pandemic experience with high inflation could make firms more willing to raise prices and consumers more likely to expect high inflation to persist,” Cook said, adding that tariff-related price increases may make it difficult to achieve further near-term progress on inflation.
Cook described the economy as still on “firm footing,” but said she sees the economy growing at a slower pace than last year. Businesses could alter their hiring plans due to tariffs, she said.
Sumber: Bloomberg
