Fed's Cook: Prepared to Hike Rates If Inflation Persists
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- Lisa Cook said she is "prepared to act" by raising rates if continued disinflation doesn't materialize, warning that five years of above-target inflation risks entrenching higher prices in wage- and price-setting behavior
- Cook was part of the 9-3 majority that voted last week to hold the benchmark rate at 3.5%-3.75%, with her vote aimed at gauging the impact of waning tariff effects, an Iran-war energy supply shock, and AI buildout pressures on prices
- Cook called inflation risks higher than employment risks at this point, citing June data that showed easing driven largely by a sharp slide in energy prices, which she cautioned against over-reading
- Neel Kashkari, president of the Minneapolis Fed and one of three dissenters who voted to hike, told CNBC he still believes higher rates are necessary
- Markets are pricing higher odds for an October rate move than a September one, according to CME Group's FedWatch tool
Why it matters: With three FOMC members already dissenting to push for hikes and a fourth (Cook) now signaling readiness, the Fed's 9-3 majority is visibly tilting hawkish — making the September or October meeting a live decision point for rate-sensitive sectors like housing and Treasuries that have priced in prolonged above-target rates.
