US Federal Reserve Board Governor Cook backs holding the policy rate steady as inflation stalls above 2 percent

In a speech on the economic outlook, Federal Reserve Board Governor Lisa D. Cook described the US economy as resilient but said inflation progress “essentially stalled” in 2025, leaving inflation above the Federal Open Market Committee’s 2 percent goal. She supported the FOMC’s decision to keep the policy rate unchanged, arguing that risks are currently tilted toward higher inflation until there is stronger evidence inflation is moving sustainably back to target. Cook cited an estimated 2.9 percent rise in the personal consumption expenditures price index over the 12 months to December 2025 and core inflation of about 3 percent, with a notable uptick in core goods inflation that she linked primarily to higher tariffs on a wide range of imports. Housing-services and nonhousing-services inflation were described as continuing to ease, and Cook noted that anchored inflation expectations would normally imply a one-time price-level effect from tariff increases, but she highlighted uncertainty around future tariff policy, the timing of pass-through, and whether expectations could become entrenched if inflation remains above target. On activity and employment, she pointed to 4.4 percent unemployment in December, low layoffs, job openings relative to unemployed workers just below 1, and payroll gains of about 50,000 in each of November and December, while flagging emerging strains among low- and moderate-income households including rising delinquencies, weaker spending, and higher youth and Black unemployment. Looking ahead, Cook said her policy decisions will be guided by incoming data and the evolving balance of risks, with particular focus on confirming a renewed disinflationary path in the absence of unexpected labor-market changes.