Fed’s Cook calls recent inflation numbers ‘disappointing’

• Key Insight: Federal Reserve Gov. Lisa Cook said that, after years of above-target inflation, the central bank can’t afford to appear complacent on price stability lest that complacency turn into market expectations. 
• Expert Quote: “After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target.” — Fed Gov. Lisa Cook.
• Forward Look:  The Trump administration has pushed for the central bank to cut rates to spur consumer borrowing and spending. The personnel of the Fed Board of Governors will largely determine whether the central bank emphasizes maximum employment or stable prices going forward.

Federal Reserve Gov. Lisa Cook said Wednesday that bringing inflation down to the Fed’s 2% target remains her top priority, calling current inflation levels “disappointing.”

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Speaking at the Economic Club of Miami, Cook said risks are “tilted toward higher inflation” and warned that the central bank’s credibility depends on getting inflation under control in the near future.

“After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future,” Cook said. “At the height of the recent bout of high inflation, we promised that we would return to target, and it was this promise that kept inflation expectations anchored and allowed us to see the sharp disinflation from 2022 through 2024.”

Cook, in a rare public appearance, said a loss of credibility in fighting inflation may not be immediately felt but could ultimately lead to another inflation crisis like the one seen three years ago.

She also pointed to lingering uncertainty stemming from the Trump administration’s tariff regime, noting that tariffs have pushed up core goods prices noticeably and could push prices still higher.

Cook said the future direction of tariff policy remains unclear, but added that even if the tariff levels were settled, the extent of those tariffs’ transference to consumer prices — and whether that transference leads to broader inflationary pressure — will take time to fully materialize.

“There is an argument for being optimistic about the path of inflation, but until I see stronger evidence that inflation is moving sustainably back down to target, that is where my focus will be, in the absence of unexpected changes in the labor market,” she added.

Cook said the latest data show the personal consumption expenditures price index rose 2.9% in the 12 months through December. Core inflation, which excludes food and energy, was estimated at 3% at the end of 2025, Cook said.In December, Fed Chair Jerome Powell reiterated the central bank’s commitment to getting inflation to its 2% target.”We’re committed to 2% inflation, and we will deliver 2% inflation,” Powell said during a post-meeting news conference. He said that outside of tariffs, inflation would be in the low 2% range, adding that tariffs have driven much of the recent overshoot.

Turning to the labor market, Cook said Wednesday that conditions appear to be stabilizing, with the unemployment rate holding at a historically low 4.4% in December. She said layoffs remain subdued and new claims for unemployment benefits have held steady.

“The number of available jobs relative to unemployed workers seeking work is just below 1,” Cook said. “This reading is historically consistent with a solid labor market, although it is appreciably down from a few years ago, when the labor market was considerably tighter.”

Cook said slower payroll growth does not signal a weakening labor market but instead reflects a smaller labor force due to immigration policy and demographic trends.

“These readings indicate to me that the labor market is roughly in balance, but I am highly attentive to developments, knowing it can shift quickly,” she said.

The remarks marked Cook’s third public appearance since President Donald Trump attempted to remove her from the Fed in August, citing unproven allegations of mortgage fraud. Cook quickly filed a lawsuit against the Trump administration, arguing the move was unjustified.

A lower-court injunction has allowed Cook to remain at the central bank while the case proceeds. The administration is currently challenging that injunction at the Supreme Court.