Federal Reserve Governor Lisa Cook expects elevated inflation for the next year due to tariff pass-through and ongoing price pressures
WASHINGTON: Federal Reserve Governor Lisa Cook warned on Monday that inflation would likely remain elevated in the coming year as tariffs add to business costs.
She delivered her first public speech since President Donald Trump sought her removal to the Brookings Institution in Washington.
Cook stated that her outreach to business leaders suggests the pass-through of tariffs to consumer prices is not yet complete.
Many companies have adopted a strategy of running down inventories at lower prices before raising consumer costs.
Other businesses are waiting for tariff uncertainty to dissipate before hiking their prices.
She therefore expects inflation to remain elevated for the next year.
Cook vowed to be prepared to act forcefully if tariff effects appear larger or more persistent than expected.
Trump moved in August to fire Cook over allegations of mortgage fraud.
The Supreme Court has barred the president from immediately ousting her from her position.
The court awaits oral arguments in January, allowing her to remain in her post until the case is heard.
This case is set to have broader ramifications for the central bank’s independence.
Cook is the first Black woman to serve on the Federal Reserve’s powerful board of governors.
She added that although tariff effects on costs should be one-off, there remains a risk of persistent inflation effects.
Cook expects inflation to continue cooling once the full tariff impact has played out.
She also anticipates the ongoing federal government shutdown will weigh on economic activity this quarter.
Possible spillover effects to the private sector from the shutdown are a concern.
Cook believes these shutdown effects should be largely temporary in nature.
For now, Fed officials continue balancing risks between higher inflation and a sharply weakening labour market.
She confirmed that every Federal Reserve meeting, including December’s, is a live meeting for potential policy action. – AFP
