Fed’s Cook says she ‘wholeheartedly’ supported half-point rate cut
2024.09.26 18:10
(Reuters) – Federal Reserve Governor Lisa Cook on Thursday endorsed the U.S. central bank’s 50-basis-point interest-rate cut last week as a way to address increased “downside risks” to employment.
“I whole heartedly supported the decision,” Cook said in remarks prepared for delivery to The Ohio State University. “That decision reflected growing confidence that, with an appropriate recalibration of our policy stance, the solid labor market can be maintained in a context of moderate economic growth and inflation continuing to move sustainably down to our target.”
Cook voted with the 11-1 majority at the Fed to reduce the policy rate by a half of a percentage point on Sept 18. Her prepared remarks, mostly about the impact of artificial intelligence on productivity and jobs, did not touch on her views about how much more or how quickly the Fed should cut rates from here.
“In thinking about the path of policy moving forward, I will be looking carefully at incoming data, the evolving outlook, and the balance of risks,” she said, using the same language the Fed did in its statement announcing the rate cut.
The U.S. labor market remains “solid,” she said, but has cooled noticeably this year, with the unemployment rate rising to 4.2% from a low of 3.4%.
“As labor demand and supply are now more evenly balanced, it may become more difficult for some individuals to find employment,” she said, noting that less-educated and minority workers tend to suffer more from weakening economic conditions.
Meanwhile, she said, inflation pressures have eased, running 2.5% in the 12 months through July. That’s “notably closer” to the Fed’s 2% goal than it was just a year ago, she said.
“The return to balance in the labor market between supply and demand, as well as the ongoing return toward our inflation target, reflects the normalization of the economy after the dislocations of the pandemic,” she said. “This normalization, particularly of inflation, is quite welcome, as a balance between supply and demand is essential for sustaining a prolonged period of labor-market strength.”
