Federal Reserve Governor Cook warned of the risk of entrenched inflation, stating that he would support interest rate hikes if necessary.

Federal Reserve Governor Lisa Cook reiterated that she is prepared to support interest rate hikes if inflation does not slow down, warning that policymakers may not have enough time to wait for inflation to return to the 2% target. Although Cook supported the decision to keep rates unchanged at the Fed's July meeting, she cautioned that the longer inflation stays above the Fed's target, the harder it will be to rein in in the future. "If I do not see signs of sustained inflation declining soon, I am ready to take action," Cook stated during an event in Alaska on Wednesday. "Having inflation above the target level for five consecutive years means the risk of high inflation becoming entrenched in business pricing and wage-setting behavior is rising, thereby leading to stubborn inflation that will be harder to control." Cook noted that the easing impact of tariffs, potential declines in oil prices, and the easing pressures related to the AI boom could all contribute to lowering inflation, thereby eliminating the necessity for tightening policy. Nevertheless, Cook emphasized that her top priority remains to restore inflation to the Fed's target level. "If there is only one thing you remember from today's remarks, I hope it is that I am firmly committed to restoring price stability," Cook stated. "First and foremost, getting inflation back to the target level is crucial to fulfilling the dual mandate given to the Fed by Congress."