Fed governor says she is ready to act if inflation does not ease

Federal Reserve governor Lisa Cook said she is ready to act against inflation if price increases do not show signs of easing soon, while also saying the US central bank can wait a little longer to study the data.

Cook told an event in Washington that she was prepared to act if signs of disinflation did not appear soon. She said she remained fully committed to the Fed's inflation target.

The Federal Reserve has a dual mandate to support price stability and maximum employment. It generally keeps interest rates higher to restrain inflation and lowers them to support the labour market. Cook's remarks pointed to greater concern about inflation than employment at this stage, suggesting she could support an interest rate increase later. She also said it was prudent for now to allow more time to see how inflation develops.

Cook said the Fed's rate-setting committee could take its time in reviewing data before deciding on interest rate changes. But she warned that risks remained strongly weighted toward higher inflation.

She said the artificial intelligence buildout did not appear to be slowing. She also said President Donald Trump's tariffs and conflict in the Middle East risk causing persistently higher inflation. Cook estimated that headline inflation this year would be about one percentage point higher than had been expected a year earlier.

US inflation has been above the Fed's two percent target for about five years. In separate remarks on Wednesday, New York Fed President John Williams said there were encouraging reasons to expect inflation had peaked and should edge down in coming quarters.

Official data released this week showed consumer inflation at 3.5 percent in June. The figure cooled from May as energy prices fell amid hopes of a US-Iran deal. The source said hostilities have since resumed in the Middle East, pushing oil prices higher and potentially keeping inflation persistent.

The Fed's rate-setting committee is scheduled to meet next from July 28 to 29.