Fed Governor Lisa Cook highlighted in a speech overnight that her baseline forecast sees the US economy will “slow moderately” this year, with a slight uptick in unemployment. Also, inflation progress will “stall in the near term”, because of tariffs and other policy changes.
Cook acknowledged the potential for a more optimistic scenario in which new policies prove minimally disruptive and consumer demand holds up, allowing for stronger-than-expected growth.
However, she placed “more weight on scenarios where risks are skewed to the upside for inflation and to the downside for growth”.
Given the elevated risks and uncertainty, Cook supports the case to keep interest rates unchanged for now. With both sides of the Fed’s dual mandate facing uncertainty and risks, she stressed that policymakers must remain “patient but attentive”.
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