US Fed Governor Cook: "Inflationary Pressures Will Persist for Several Months"

US Fed Governor Cook: "Inflationary Pressures Will Persist for Several Months"

Lisa Cook, a governor of the US Federal Reserve (Fed), said that inflationary pressures will continue for several months due to demand related to artificial intelligence (AI) and rising oil prices, Reuters and other media reported on the 28th (local time).

At an AI and New Technology conference held in Oakland, California, Governor Cook stated, "The labor market appears to be in a good position to withstand interest rate hikes. Going forward, I will review what policy interest rates will be needed to bring inflation down to our target (2%)."

She added, "Of course, the number and size of future interest rate adjustments will be determined based on the economy's response to policy measures thus far and inflation and labor market data over the coming months."

Governor Cook said that inflation has remained "too high for too long," and for the 12 months leading up to August, inflation was about 3.8%, roughly double the target (2%).

Governor Cook said, "Inflationary pressures will continue in the coming months due to the spread of AI, the pass-through of rising oil prices due to conflicts in the Middle East, and supply chain disruptions."

She said that while productivity gains driven by AI might bring some disinflation in the medium term, these effects would not materialize quickly enough to offset inflationary pressures this year.

Financial markets are pricing in about a 75% chance of an additional interest rate hike by the Fed in October, and also see a high possibility of a third consecutive rate hike at the December meeting.

Previously, the Fed raised the benchmark interest rate by 0.25 percentage points to 3.75-4.00% on the 16th. This was the first benchmark interest rate hike in 3 years and 2 months.