(AFP) – A key US central bank official warned Monday that inflation would likely remain elevated in the coming year as tariffs bite, while vowing to fulfill her duties even as President Donald Trump seeks her removal.
“My outreach to business leaders suggests that the pass-through of tariffs to consumer prices is not yet complete,” Federal Reserve Governor Lisa Cook said at the Brookings Institution think tank in Washington. She noted that many companies have adopted a strategy of running down inventories at lower prices before raising consumer costs, while others are waiting for tariff uncertainty to dissipate before hiking prices. “As such, I expect inflation to remain elevated for the next year,” Cook added. But she vowed to “be prepared to act forcefully” if tariff effects appear to be larger or more persistent than expected.
Cook on Monday also nodded to her ongoing legal battle, saying she was “beyond grateful” for the support she has received. She declined to comment further but pledged: “I will continue to carry out my sworn duties on behalf of the American people.” Trump had moved in August to fire Cook over allegations of mortgage fraud, although the Supreme Court has barred the president from immediately ousting her. The court awaits oral arguments in January, allowing Cook to remain in her post at least until the case is heard.
Cook is the first Black woman on the Fed’s powerful board of governors, and her case is set to have broader ramifications for the independent central bank. On Monday, she added that even though the effects of tariffs on costs should be one-off, with inflation likely to continue cooling once the full impact has played out, there remains a risk of persistent effects. The Fed has a long-term inflation target of two percent.
Cook also expects the ongoing government shutdown to weigh on economic activity this quarter, with possible spillover effects in the private sector. But she believes these should be “largely temporary.” For now, Fed officials continue balancing between the risks of higher inflation and a sharply weakening labor market. “Every meeting, including December’s, is a live meeting,” said Cook. The Fed’s next policy meeting is set for December 9-10. Last week, the Fed made a second straight interest rate cut, a decision Cook said she backed as “the downside risks to employment are greater than the upside risks to inflation.”
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