Federal Reserve Governor Cook says supply shocks are proving unexpectedly persistent, testing traditional response approaches.

Federal Reserve Governor Lisa Cook said supply shocks have become more prominent and their effects "surprisingly persistent," testing the Fed's traditional approach of looking through such shocks. "The effects of supply shocks have been surprisingly persistent, and we've seen more supply shocks over the past few years, so they've become more prominent," Cook said Thursday at an event hosted by the New York Fed. "Our traditional view in the past was to look through these supply shocks, because tightening monetary policy won't affect oil prices, and it won't affect wars," she said. "It may now be the case that, depending on many different factors, one might come to a different conclusion about what the optimal policy response is," Cook said during a panel discussion with New York Fed President John Williams. She said the Fed needs to ensure inflation expectations do not become unanchored. Cook reiterated that she believes the AI buildout is adding to inflationary pressure, and that it remains unclear when the technology will deliver productivity gains. "I worry about when we'll see the productivity gains that could help cool inflation, and where the next supply bottleneck will be," she said.