MNI BRIEF: Fed’s Cook Says Policy Not On Preset Course

Federal Reserve policy is not on a preset course as the economy faces elevated risks of both higher inflation and elevated unemployment, Fed Governor Lisa Cook said Monday. 

“Looking ahead, policy is not on a predetermined path. We are at a moment when risks to both sides of the dual mandate are elevated,” she said in prepared remarks to the Brookings Institution. 

She said inflation is still too high but she expects the boost from tariffs to fade overtime, allowing price growth to return to the central bank’s 2% target. She estimates that PCE and core PCE for September, which were not released due to the government shutdown, will both come in at 2.8%. (See: MNI POLICY: Lingering Inflation Tempers Fed Easing Push)

“Both of these readings are as high or higher than their readings a year before, propped up by an increase in tariff-affected goods prices,” Cook said. “My assessment is that inflation is on track to continue on its trend toward our target of 2% percent once the tariff effects are behind us.”

Cook said “the latest available indicators suggest that the labor market remains solid, though gradually cooling.” She said weaker payrolls growth “can mostly be explained by a coincident decline in population growth due to immigration policy.”