Fed’s Cook ‘Wholeheartedly’ Supports Half-Point Rate Cut, According to Reuters

Federal Reserve Governor Lisa Cook expressed strong support on Thursday for the recent 50-basis-point cut in interest rates, viewing it as a necessary measure to tackle increasing “downside risks” to employment.

“I wholeheartedly supported the decision,” Cook stated in her prepared remarks at The Ohio State University. She emphasized that this action demonstrated growing confidence that, with a suitable recalibration of policy, the robust labor market could be sustained alongside moderate economic growth and a gradual decline in inflation toward the Fed’s target.

Cook was part of the overwhelming 11-1 vote at the Federal Reserve to lower the policy rate by half a percentage point on September 18. While her speech primarily focused on the impact of artificial intelligence on productivity and the job market, she refrained from commenting on future rate cuts.

“As we consider the future path of policy, I will closely monitor incoming data, the changing outlook, and the balance of risks,” she remarked, echoing the language used in the Fed’s announcement regarding the rate reduction.

Cook noted that while the U.S. labor market remains “solid,” there have been signs of cooling this year, with the unemployment rate rising to 4.2% from a low of 3.4%. She pointed out that the balance between labor demand and supply has shifted, potentially making it more challenging for some individuals to secure employment, particularly less-educated and minority workers who often bear the brunt of economic downturns.

Inflation pressures have shown signs of easing, with rates sitting at 2.5% over the 12 months leading up to July. Cook described this figure as “notably closer” to the Fed’s 2% goal compared to the previous year.

She added, “The return to balance in the labor market between supply and demand, as well as the ongoing progress toward our inflation target, highlights the normalization of the economy after the disruptions caused by the pandemic.” Cook welcomed this normalization, particularly concerning inflation, stating that a balance between supply and demand is crucial for maintaining a sustained period of labor-market strength.