Federal Reserve Governor Lisa Cook Signals Rate Hike Readiness as Inflation Stays High

Federal Reserve Governor Lisa Cook said Wednesday she is prepared to support higher interest rates if inflation does not begin moving back toward the central bank’s target, giving fresh weight to the Fed’s internal debate over whether holding steady is still enough.

Cook, speaking at the Anchorage Economic Development Corporation in Alaska, said inflation remains too high and has exceeded the Federal Open Market Committee’s 2 percent target for more than five years. She cited PCE inflation of 3.7 percent over the 12 months through June and core inflation of 3.3 percent.

Her comments did not amount to a call for an immediate hike. Cook said some disinflationary forces may still bring inflation down without another rate increase, including fading tariff effects, potential easing in oil prices and possible relief from AI-related supply pressures.

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But she also warned that the Fed may not have much room to wait. Cook said she would support a rate increase if it becomes necessary to bring inflation down and warned that prolonged above-target inflation can become embedded in wage and price-setting behavior.

The remarks followed the Fed’s July 29 decision to hold its benchmark rate at 3.50 percent to 3.75 percent. That vote was 9 to 3, with Beth Hammack, Neel Kashkari and Lorie Logan dissenting because they preferred a quarter-point increase.

The consequence for households and businesses is direct. A future hike would likely keep pressure on borrowing costs, including mortgages, credit cards, auto loans and business financing. Holding rates steady, meanwhile, carries the risk that inflation expectations remain elevated.

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