Federal Reserve Governor Cook stated that the longer inflation remains above target, the harder it becomes to control, reiterating that interest rate hikes will be supported if necessary.

Federal Reserve Governor Michelle Cook reiterated on Wednesday that she is prepared to support further rate hikes if inflation does not continue to ease in the future, warning that if inflation remains persistently above the 2% target, the Federal Reserve may not have much time left to wait; otherwise, it will become increasingly difficult to control inflation in the future. While attending an event in Alaska, Cook stated that although she supported keeping interest rates unchanged at the July meeting, she would be ready to take action if she does not see signs of continued inflation decline in the near term. If I do not see signs of continuing inflation decline in the near term, I am prepared to take action, Cook said. Inflation has been above the target level for five consecutive years, and over time, higher inflation may gradually become entrenched in corporate pricing and wage-setting behavior. At that point, inflation persistence will further increase, and it will be much more difficult for us to manage inflation. Cook's latest remarks are consistent with her speech delivered on July 15, in which she clearly stated that the Federal Reserve may need to raise interest rates further in order to curb the ongoing price pressures. This year, the Federal Reserve has kept the target range for the federal funds rate at 3.5% to 3.75%. However, an increasing number of policymakers are beginning to signal hawkish views, believing that further tightening of monetary policy will be necessary to bring inflation back down to the 2% policy target. Cook noted that there are also some factors that could favor a cooling of inflation. For example, the effects of tariffs are gradually diminishing, international oil prices have room to decline, and the wave of investment in artificial intelligence (AI) could alleviate some pricing pressures, helping inflation to continue to fall, thereby reducing the necessity for further policy tightening. However, she emphasized that the most important task for the Federal Reserve at present is to restore price stability. Cook stated, If there is only one point you remember from my speech today, I hope it is my firm commitment to restoring price stability. She further pointed out that bringing the inflation rate back down to the 2% target is the foremost and most important task in achieving the dual mandate of the Federal Reserve. Only by first achieving price stability can the Federal Reserve better fulfill its dual responsibilities to promote maximum employment and maintain price stability as mandated by Congress.