Lisa Cook, a governor of the US Federal Reserve, said she is ready to support raising interest rates if inflation does not slow, warning that waiting too long could make it harder to control. She stated that if there are no signs of inflation easing further soon, she is prepared to act. She noted that inflation staying above the 2% target for five years increases the risk of price- and wage-setting behavior that could lead to persistent inflation. However, Cook also said that diminishing tariff impacts, the downward trend in oil prices, and easing pressures from the AI boom could help alleviate inflation and reduce the need for tighter monetary policy. At the Fed meeting on July 28-29, Cook supported the decision to hold rates at 3.50 to 3.75 percent, but warned that the longer inflation stays above target, the harder it becomes to control. The meeting resulted in a 9-to-3 vote to keep rates steady, while three policymakers, including Beth Hammack, Neel Kashkari, and Lorie Logan, voted for a quarter-point hike due to concerns about inflation exceeding the target for more than five years.
Cook's hawkish stance on potential rate hike supports higher policy rate.
Hawkish Fed comments push bond yields up, lowering bond prices.
