Federal Reserve Gov. Lisa Cookwho is facing a Supreme Court dispute with the President Donald Trump to keep his job, he has indicated that he will not support interest rate cuts anytime soon.
In a speech Wednesday at the Economic Club of Miami, Cook made some of his strongest public statements to date in favor of leaving interest rates unchanged, saying the threat of inflation outweighed risks to the labor market.
“Right now, I see risks leaning to inflation,” Cook said. “Until I see strong evidence that inflation is coming back down in a positive direction, that’s where I will focus, barring an unexpected change in the labor market.”
Last month, Cook joined the Fed Chair Jerome Powell and a majority of the Federal Open Market Committee to vote in favor of leaving the benchmark rate unchanged in the 3.5% to 3.75% range, pausing the rate cut after three consecutive cuts in 2025.
The Fed uses high interest rates to fight inflation, and low rates to boost the labor market, targeting an annual inflation rate of 2% in line with high employment.
With CPI inflation running at 2.7% in January, Cook’s comments suggest that he will not reverse further rate cuts until the rate falls, unless the labor market shows signs of danger.
“I think these comments are very consistent with Powell’s answers at last week’s press conference,” said the Realtor.com® Senior Economist. Jake Krimmel. “It’s not that Cook is happy with the outlook for the labor market; it’s that he’s not happy with inflation.”
Financial markets are currently predicting a 77% chance that the Fed will hold rates steady again at the next FOMC meeting in March, according to CME FedWatch.
Investors see only two rate cuts possible by the end of the year, despite Trump’s nomination Kevin Warsh to take over as Fed chairman in May. Although Warsh called for lower interest rates, he would have to change the majority of the FOMC to change policy.
Cook’s comments come as he awaits a Supreme Court decision on Trump’s attempt to impeach him over alleged mortgage fraud, in a case Powell called “perhaps the most important case in the Fed’s 113-year history.”
Last month, even Trump-appointed judges strongly opposed Trump’s attempt to remove Cook, and Justice.Brett Kavanaugh suggesting that it “could weaken, if not eliminate, the independence of the Federal Reserve.”
Trump has made no secret of his desire to cut interest rates significantly, and critics of the president say the lawsuit against Cook and a separate Justice Department investigation of Powell are part of a pressure campaign to change rate policy.
Lisa Cook cites the growing housing divide
In his speech Wednesday, Cook cited the challenges of housing affordability and tensions between baby boomers and young Americans as key factors affecting consumer sentiment.
“Consumer sentiment, by most measures, is lower than expected in a strong economy, and job prospects have continued to deteriorate,” Cook said.
Cook said he is not dismissing the weak sentiment as unfounded, saying that declining employment, uncertainty about the impact of AI, and rising costs for middle-class families are all dampening sentiment.
“Most importantly, housing costs have risen sharply for homebuyers and renters and far outstripped wages in almost every region of the country,” he said.
Cook asserted that this practice may feel pain especially in recent years due to the combination of other economic trends.
“For example, I think the age distribution of our workforce can make these trends more prominent now that older adults are competing for housing and jobs with the rich old kids,” she said.
Cook’s comments show that the Fed is taking seriously the growing divide in the housing market that has been pitting first-time buyers against the wealthy.
Last year, the average age of first-time home buyers rose to a record high of 40 years, suggesting that many younger families are being priced out of the housing market.
Although millennials are the largest age group in the country, baby boomers accounted for 42% of all home buyers last year, while millennials dropped to 29% of all buyers.
