US Fed Director Cook: "Inflation heading in the wrong direction...rate hike if it persists"

US Fed Director Cook: "Inflation heading in the wrong direction...rate hike if it persists"

"Risk of inflation becoming entrenched if high prices persist for 5 years...AI investment also a potential upward pressure on prices"

Lisa Cook, a governor of the U.S. Federal Reserve (Fed), stated on the 27th (local time) that inflation is moving in the wrong direction and that she is prepared to raise interest rates if this trend continues.

According to Bloomberg, Governor Cook made these remarks at a Stanford University event, saying, "What I want to make clear in my risk assessment is that the upside risks to inflation remain high."

She said it would be appropriate to keep interest rates frozen for the time being, predicting that inflation rates would slow down again in the coming months.

However, she pointed out that if inflation continues to exceed the Fed's target of 2% for five years, there is a risk that the pattern of upward price pressures being reflected in price and wage decisions could become entrenched.

She further emphasized, "I am prepared to raise interest rates if the expected disinflation does not materialize in a timely manner."

Governor Cook also assessed the current U.S. labor market as largely stable, but diagnosed that the downside risks to employment have increased.

In addition, she mentioned that the recent $1.5 trillion artificial intelligence (AI) investment boom, primarily in semiconductors and advanced equipment, could become another factor putting upward pressure on prices.