Fed May Slow Interest Rate Cuts Due to Strong Economy, Says Governor Cook

Investing.com -- Federal Reserve Governor Lisa Cook stated on Monday that, considering the current state of the economy and inflation that appears to be more persistent than expected, the Fed may adopt a more cautious approach to interest rate cuts.

Cook noted that since the Fed started to lower its benchmark policy rate in September, the labor market has proven to be more resilient and inflation has been more persistent than initially anticipated.

According to reports, Cook made these remarks during a speech at the University of Michigan Law School. "Over time, I still believe it would be appropriate to move the policy rate toward a more neutral stance," Cook said, adding that the reductions made so far have "significantly reduced the restrictiveness of monetary policy."

"I envisioned moving faster in the early stages of our easing campaign and then easing more gradually as the policy rate approached neutral," Cook added.

Cook expressed that at the beginning of the year, the U.S. was in a strong position, with low unemployment rates by historical standards, and felt that inflation was gradually, though unevenly, returning sustainably to the Fed's 2% target.

In her remarks, Cook also shared her views on financial stability, describing the financial system as "solid and resilient." However, she pointed to certain areas, such as the growth of private sector credit, that need to be closely monitored.