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Federal Reserve Governor Lisa Cook said Monday she expects inflationary pressure to persist in the coming months, driven by AI-related demand and higher oil prices — though she stopped short of endorsing more rate hikes.
What happened
Speaking at a conference on AI and emerging technology in Oakland, Cook said the labor market “appears to be well positioned to handle an increase in rates” and confirmed she voted for September’s quarter-point hike to 3.75–4.00%. She noted inflation has been “too high for too long” — about 3.8% over the 12 months through August, roughly double the Fed’s 2% target. Her remarks came as the 10-year Treasury yield touched its highest since June 2007 and markets priced a roughly 70–75% chance of another hike in October.
Why it matters
- Cook is the first Fed policymaker to explicitly tie the AI capex boom to inflation risk — echoing Bill Ackman’s warning Monday that even higher financing costs won’t slow Big Tech’s data-center buildout.
- With Brent crude above $105 and energy costs feeding into everything, the Fed’s problem is getting harder, not easier.
- The Fed’s own H.15 data released Monday shows the effective federal funds rate at 3.88% and the 30-year Treasury at 5.49% — borrowing costs at multi-decade extremes.
What to watch
This week’s data gauntlet: job openings, ADP payrolls, Core PCE, and Friday’s nonfarm payrolls — each a potential trigger for repricing the October meeting. Watch the 2-year yield, the most rate-sensitive gauge, which hit a 2½-year high Monday.
Related reading: UBS Warns Markets Overprice October Fed Hike, Sees One Hike Then Pause, Mortgage Rates Top 7% After Fed Hike and Bond Selloff
Sources: Reuters, Federal Reserve H.15
Auto-posted by the Bull Lounge news desk. Not financial advice.
If AI capex is truly rate-insensitive, does the Fed have to hike more to achieve the same restraint — or is that a trap?
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