Fed’s Cook focused on inflation risks as greater threat to economy

Subscribe to enjoy similar stories. Federal Reserve governor Lisa Cook sees a greater threat to the economy from elevated inflation than from a weakening labor market, a stance that suggests she could be skeptical of supporting a return to rate cuts.

Speaking in Miami on Wednesday to a club of economists, Cook said the economy has remained resilient and argued that, while the labor market has slowed, conditions are still solid for most workers. Inflation, meanwhile, remains elevated, and it is too soon to take comfort that price increases are cooling toward the Fed’s 2%-a-year target, Cook said.

Until greater evidence of calmer inflation emerges, “that is where my focus will be, in the absence of unexpected changes in the labor market," Cook said, according to a published text of her remarks. She added: “After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future." If most of Cook’s colleagues share her assessment, Fed officials may be reluctant to return to further rate cuts in the months ahead after they eased their interest-rate target down to a range of 3.5% to 3.75% in three straight cuts over the final months of 2025.

The Fed then held rates steady in January. At the end of last year, the median Fed official penciled in one further rate cut in 2026, but Wall Street traders don’t anticipate seeing more Fed easing until later in the year, as reflected by their bets in interest-rate futures markets.

The central bank’s leadership transition could prove a major wild card. Last week, President Trump said he plans to nominate Kevin Warsh, a former Fed governor, to succeed Jerome Powell as