Fed’s Cook Signals Readiness to Raise Rates if Inflation Persists

Federal Reserve Governor Lisa Cook on Wednesday delivered a stiff warning on inflation, stating she is ready to back an interest rate increase if price pressures do not show clear signs of cooling.

“Inflation is too high, and I consider the risks to the inflation side of the dual mandate higher than the risks to the employment side at this point,” Cook said in a speech in Anchorage, Alaska, according to CNBC. “As such, I am prepared to act by raising rates, if necessary.”

Cook’s remarks, delivered before the 2026 Economic Luncheon of the Anchorage Economic Development Corporation, come as the Fed struggles to contain inflation that has run well above its 2% target for five years. The personal consumption expenditures price index, the Fed’s preferred gauge, stood at 3.7% in June compared with a year earlier, as reported by Reuters.

The governor acknowledged that June data showed some easing, largely due to a sharp slide in energy prices, but cautioned against reading too much into a single data point. “If I do not see signs of continued disinflation soon, I am prepared to act,” Cook said, as reported by CNBC.

Cook was among the 9-3 majority on the Federal Open Market Committee that voted last week to hold the benchmark interest rate at 3.5% to 3.75%. She said her vote reflected a desire to assess how potentially waning impacts from tariffs, an energy supply shock tied to the Iran war, and pressures from the artificial intelligence buildout might affect prices.

“I felt it was appropriate not to change rates while we see how” inflation trends shape up, Cook said, according to Reuters. She added that she is “firmly committed to restoring price stability.”

The governor warned that the risk of inflation becoming entrenched is rising. “With five years of above-target inflation, the risk grows that higher inflation may become entrenched in price- and wage-setting behavior, leading to persistence that would be much harder for us to attack,” she said, per CNBC. “The longer inflation is above target, the more likely this scenario becomes.”

Cook stressed that the Fed’s room for delay is shrinking. “While we might be able to afford to wait for longer in a different environment, we do not have that luxury in this one,” she said, according to both CNBC and Reuters.

Markets are pricing in possible action as soon as September, with higher odds for an October move, based on the CME Group’s FedWatch tool, CNBC reported.

Cook’s hawkish stance aligns with a growing chorus of Fed officials. Minneapolis Fed President Neel Kashkari, one of the three dissenters who voted for a rate hike at last week’s meeting, told CNBC earlier Wednesday that he still believes higher rates are necessary. New York Fed President John Williams and Philadelphia Fed President Anna Paulson have also signaled openness to raising rates if needed, Reuters reported.

By contrast, Fed Chairman Kevin Warsh has steadfastly refused to provide guidance on the future path of interest rates, according to Reuters.

Cook noted that if a rate hike becomes necessary, she would weigh its impact on the overall economy. “I would support an increase, if it becomes necessary, to bring inflation down. It may not,” she said, as reported by Reuters.

She also addressed consumer sentiment, tying the sour mood of households to inflation, and noted that the most dire predictions about AI-related job losses have not yet materialized, though risks remain, according to Reuters.

The core message from Cook is clear: the Fed stands ready to act if inflation does not resume its decline.