Fed's Cook Signals Rate Hike if 2% Inflation Goal Slips as Tariffs, Iran War Lift Prices
Updated
Updated · Reuters · May 27
Fed's Cook Signals Rate Hike if 2% Inflation Goal Slips as Tariffs, Iran War Lift Prices
12 articles · Updated · Reuters · May 27
Lisa Cook said the Fed should keep rates at 3.50%-3.75% for now but is prepared to raise them if disinflation fails to arrive soon.
Tariffs, oil prices since the Feb. 28 Iran war, and AI-driven demand for chips, software and data-center construction are pushing inflation higher, which Cook said is moving in the wrong direction.
Cook still expects price pressures to ease without a hike, but warned five years of inflation above the Fed's 2% target risk embedding faster price and wage setting.
The stance could test Fed Chair Kevin Warsh, who was expected by President Donald Trump to lower rates once the war ends, even as other policymakers have also floated possible hikes.
Cook said the labor market remains broadly stable, with April unemployment at 4.3%, though AI adoption could cause job losses before productivity gains materialize.
With oil prices surging and jobs at risk, can the Federal Reserve truly tackle both problems at once?
Beyond interest rates, what can shield the US economy from a prolonged global energy war?
As AI booms for some and gas prices bite for others, is the economy heading for a deeper divide?
Fed on Alert as Iran Conflict Slashes Oil Supply by 10 Million Barrels, Fueling U.S. Inflation and Economic Risks
Overview
This report highlights how the Federal Reserve, led by Governor Lisa Cook, is holding interest rates steady while closely watching key economic risks, especially oil prices. Inflationary pressures are rising due to the ongoing conflict with Iran, tariffs, and major investments in artificial intelligence. The Iran war has caused a historic drop in global oil supply, driving up energy costs and fueling inflation across many sectors. While the labor market remains mostly stable, risks to employment are growing because of both geopolitical tensions and rapid technological change, creating a challenging environment for economic stability and Fed policy decisions.