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Fed: I expect inflation to remain stable for the rest of the year and decline in 2026 — Lisa Cook

Federal Reserve (Fed) member Lisa Cook said she expects the Fed’s progress on inflation to continue despite a rocky start to the year. Lisa Cook spoke to the Economic Club of New York on Tuesday.

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At some point it will be appropriate to cut rates.

Current policy is well positioned to respond to the economic outlook.

An increase in inflation expectations would imply maintaining restrictive monetary policy for longer.

I am very attentive to inflation expectations.

The timing of any policy adjustment will depend on economic data and its implications for the outlook and risk balance.

Monetary policy is restrictive.

Inflation has decreased and labor market rigidity has eased.

I am fully committed to the 2% inflation target.

Policy would also need to respond to a sharper-than-expected weakening of the economy and labor market.

The labor market is tight but not overheated.

The risks to achieving inflation and employment targets have moved towards a better balance.

I see 12-month inflation moving sideways for the rest of this year, and slowing more sharply next year.

I expect 3 and 6 month inflation rates to decline on a bumpy road.

Progress on inflation has slowed, but I expect the disinflationary trend to continue.

I lean toward optimism on innovation, productivity, allowing for a faster pace of non-inflationary growth.

The rise in credit card and auto loan delinquencies is not yet concerning, but it needs to be watched.

I expect economic growth to remain close to the potential growth rate, something above 2%.

The monthly employment gains needed to keep the unemployment rate stable have likely doubled to nearly 200,000.

The financial system is not currently positioned to unusually amplify any future shocks.

There are challenges to measuring housing inflation.

It is defensible to include the owners’ equivalent rent in the CPI.

There has been a prolonged housing shortage.

The Fed is watching the unemployment rate, but it is still at a low level.

The Fed has the tools to adjust if there is an unexpected change in unemployment.

There is ample evidence that monetary policy is restrictive.

It will be a challenge to drive productivity beyond the long-term average.

Source: Fx Street

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