Fed Governor Lisa Cook said inflation in coming months will remain pressured by
rising demand tied to AI, higher oil prices and supply disruptions from the
Middle East, though she did not explicitly call for further rate hikes. She said
the labor market currently can withstand higher rates and that the timing and
scale of any policy adjustments will depend on how the economy responds and on
upcoming inflation and jobs data. Cook noted US 12-month inflation as of August
is about 3.8%, well above the Fed’s 2% target. She said AI-related
infrastructure buildout will add near-term inflationary pressure; any
productivity gains from AI that could ease inflation are likely to materialize
only in the medium term and not this year. There is not yet clear evidence that
AI is reshaping the labor market, she added, but the Fed is monitoring the risk
of a transitory rise in unemployment. If AI shocks the jobs market, Cook warned
the Fed’s ability to ease policy to support employment would be limited because
rate cuts could further boost inflation.
