U.S. Fed Governor Cook: "Inflationary Pressures Will Persist for Months"

[Financial News] Lisa Cook, a governor of the Fed, expects inflationary pressures to persist for the coming months amid increased investment in artificial intelligence (AI) and high oil prices.
According to British media reports on the 28th (local time), Cook said, "The buildup of AI infrastructure, rising oil prices and supply-chain disruptions stemming from the conflict in the Middle East are expected to continue putting pressure on prices over the coming months."
Earlier this month, the Fed raised its benchmark interest rate by 0.25 percentage point, embarking on monetary tightening for the first time in three years. Cook also voted in favor of the rate hike, which was approved unanimously. She noted, "Inflation has remained far too high for too long." In fact, the overall inflation rate for the 12 months through August was about 3.8%, nearly twice the Fed's 2% target.
Cook said, "We will assess what policy rate is needed to continue bringing inflation down to the target level," adding, "The number and size of future adjustments will depend on how the economy responds to the rate hikes implemented so far, as well as upcoming inflation and employment data."
In the short term, Cook expects increased AI investment to push up prices. She explained that rising demand from the construction of data centers and related infrastructure is creating inflationary pressure, and that the impact is spreading beyond AI-related industries. She said, "We expect AI to lower prices over the medium term by boosting productivity," but cautioned, "It will not emerge quickly enough to offset the inflationary pressures occurring this year."
Regarding AI's impact on the labor market, Cook said no clear structural changes have yet been observed. However, she said the Fed is closely monitoring the possibility that AI could temporarily raise the unemployment rate. In that case, she explained, if the Fed cuts rates to support employment, it could instead fuel inflation, potentially limiting the scope for a policy response.
[email protected] Hong Chae-wan Reporter