Federal Reserve Governor Powell sends a hawkish signal: Inflation risks have overtaken the job market, and action may be needed if necessary.

Federal Reserve Board member Lisa Cook said on Wednesday that the main risk facing the current US economy has shifted from the labor market to inflation, with persistent high price pressures becoming a key concern for the Federal Reserve. She emphasized that if clear signs of inflation cooling are not seen in the future, the Federal Reserve is prepared to take action to ensure inflation falls back to its 2% target. Cook, speaking at an event in Washington on that day, said, "If we do not see signs of inflation continuing to decline in the near term, I am prepared to take action. I will remain committed to achieving the Federal Reserve's inflation target." It is worth noting that her comments come at a time when the latest US consumer price index for June showed the first month-on-month decrease in six years. However, Cook pointed out that when other economic data released this week is considered, the current inflation level remains nearly two percentage points above the 2% target favored by the Federal Reserve. Last month, the Federal Reserve kept the federal funds target range unchanged at 3.50% to 3.75% for the fourth consecutive time. However, the latest economic forecasts show that about half of Federal Open Market Committee officials expect at least one more rate hike this year. With inflation remaining above target for five consecutive years, more and more Federal Reserve officials have expressed concerns about inflation stickiness. Earlier on that day, Fed Chair Powell reiterated at a congressional hearing that he is committed to restoring price stability, while downplaying the view that artificial intelligence investments will push inflation higher in the long term. However, Cook takes a relatively cautious stance on this. She said that compared to a year ago, the labor market has stabilized, while inflation risks have clearly increased, leading to a shift in focus for Federal Reserve policy. "In fact, I believe that the risks facing the labor market are lower than a year ago. Therefore, the risks in terms of employment have diminished, and the policy risk balance has shifted more towards the inflation target." Cook believes that continued investment in artificial intelligence infrastructure, as well as supply chain impacts from tariff policies and the Middle East situation, could all be important factors driving inflation to remain high in the long term. She pointed out that earlier this year, tensions in the Middle East pushed up energy prices, but the continuous rise in commodity prices in recent months indicates that this round of inflation rebound is not just due to higher energy prices. Nevertheless, Cook stated that medium to long-term inflation expectations currently remain stable overall, indicating that the public still has confidence in the Federal Reserve's control of inflation. However, she warned against complacency. "The public's confidence in the Federal Reserve is encouraging, but that does not mean we can let our guard down. The risk of past high inflation persisting and further pushing up future inflation exists." During the subsequent question and answer session, Cook stated that the Federal Reserve's monetary policy still has certain restrictions on the economy, but policymakers have sufficient time to observe further economic data before deciding whether to adjust policy. She emphasized that the inflation data released this week only reflect one month's situation, and cannot be used to determine a trend. "One month of data does not constitute a trend, so we must continue to closely monitor changes in subsequent data."